Thursday, 17 April 2008

The $700 Million Loss

Today, the German IRS branch....proudly announced that they were short 500 million Euro ($700 million dollars) from the cigarette taxes for last year. Basically a 8-percent loss over the previous year. Its a pretty serious loss of revenue and will make the big boys shake a bit.

Around five years ago....the Greens who led the country's health cabinet post.....pushed a hefty tax raise on smokes. It was a two-part deal....which the finazamt (the IRS dudes) bought off on. Well....at the conclusion of episode one...there was a $300 million loss and folks got real worried about things. The Green health dudes said that this was great...in that the public was quiting smoking. The truth was figured out shortly after that....with a vast number of Germans buying out-of-country cigarettes and the black-market crew was moving double the normal amount of smokes into the country.

Last year....I'm guessing....more folks bought more smokes outside of the country....and the black-market crew went double on what they had previously. They likely run twenty-four hours a day....seven days a week.....and even more on holidays. The customs folks? Outmanned drastically. Even if you could overcome the black-market guys.....the vast number of folks living within forty miles of the border of any country around them....are going and buying cheaper smokes (especially Czech, Luxembourg, and Poland).

So if you miss out on $700 million in cash...how do you make up for it? You basically have to start thinking about additionally taxes on other things....like beer or wine or hotels. Something has to be increased. So folks are mentally preparing themselves by the end of this year....with some type of massive tax of a unusual type. Just another reason why I need to leave.

The Kenya Method of Government

A few weeks ago....they had elections in Kenya....and there were some issues. The current government figured that the election was finished and they could continue running the government, but there was ample proof of the opposition picking up enough votes. So a massive issue arose, it was finally decided that a union of parties (the big two)....would run the country. So this week....the ministers were signed on.

Instead of the normal 26 ministers, with the one prime minister.....we now have 40 cabinet ministers and 52 assistant cabinet ministers. Its an interesting episode. Each cabinet minister makes $18k a month and each assistant minister makes $15k a month. Pretty hefty money for those folks. So salaries for the prime minister, the two assistant primes and these 92 odd folks, will cost $1.5 million per month....just for a salary.

Forty secretaries and forty-five security guys had to be added as well. Then toss on at least fifty additional cars that were added for this mess. Oh, and then add in insurance, travel allowances, club membership, a rural house for each of them,

So to make both parties happy....the government had to cough up $13 million extra per year...MINIMUM. This equals out over fifty brand new schools that the country could have built. Adding to this mess....each guy will have bribery and special jobs that they will have to hand out to the favored folks who elected them. The amusing thing is that the per capita per person in this African country....is $400 a year.

For anyone looking for a country that is bound for failure and economic collapse within ten years....Kenya is an excellent choice. Neither party will be able to sustain growth, and both will drown the country in a deep well of pity. My prediction is that a group of the have-not's will start to pop up and then folks will blame both parties....thus starting a guerrilla war.