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Mario Draghi: A competitiveness strategy for Europe

raverbashing 2y ago
Words of wisdom by Mario Draghi > in fact, there is no EU company with a market capitalisation over EUR 100 billion that has been set up from scratch in the last fifty years, while all six US companies with a valuation above EUR 1 trillion have been created in this period. > This lack of dynamism is self-fulfilling.
oriettaxx 2y ago
the term "defence" is cited 82 times, in 62 pages This is the great European "New Deal", what a genius He'll be dead by the time we'll realize the effect of this 'great' move. Much much better the arc of St. Luis ;)
- oriettaxx 2y ago
  just replace the term "defence" with "weapons and military technology", or even more explicit with: "assalt rifles, machine guns, bombs, tanks, missiles, killer drones, ..." and you'll think twice about it. By the way, most of the "defence" industry in Italy did not pay VAT till last year where they had to align to EU directives (well, they may still not pay VAT for supply to arm force)... I have no doubt lobbiest worked a lot on convincing leaders to create jobs by manufactoring guns.
  - throwaway48540 2y ago
    Why would I think twice about it? It's a no brainer given last few years. I just hope they also include artillery shells and cannons too. VAT is a tax levied on consumers, not companies/industries. Companies get it from consumers and forward it to the government, that's an optimization of enforcement, it doesn't mean companies pay it out of their pockets. Government pays companies back whatever VAT they paid on stuff they bought. It would make no sense for the government to pay VAT to itself when buying such expensive stuff; this is again a process optimization, not some fundamental change of how the tax works. Why would you need lobbyists when you have Putin just behind the door?
    - oriettaxx 2y ago
      > It would make no sense for the government to pay VAT to itself I've got it, but you agree with me that is weird that when the State buys from the private market they do have to pay VAT (even to themselves) while when that market is "defense" it may not happen? Then, of course, If I produce pistol (as a company), and buy metal, and make a pistol, don't I end up paying VAT on the "added value" ? in other way, even if a company sell to other companies, the VAT% (10% or 90%) does or does not affect profitability? Then of course you sure have some percentage of buyers who cannot claim VAT (is it small, only consumers? what about not perfectly legal business.... )
      - throwaway48540 2y ago
        When the state buys stuff, the paid VAT always goes right back to it. In some/many cases it's easier to eat this inefficiency, but in some cases it's easier to not do the useless transfer - especially when we're talking about tens of millions of euro and products that only the government can buy. I don't see anything weird about selecting few specific industries where the transactions are always with the government and in high amounts to optimize this useless transfer and bureaucratic busy work away. Nobody paid less taxes than they should have, nothing has changed about that. > Then, of course, If I produce pistol (as a company), and buy metal, and make a pistol, don't I end up paying VAT on the "added value" ? in other way, even if a company sell to other companies, the VAT% (10% or 90%) does or does not affect profitability? No, profitability is not affected in any way. The consumer always pays, not any company in the chain of raw material to consumer product. VAT is irrelevant to them, it's just some bureaucracy that needs to be taken care of, but nothing else. It could be 110% and they wouldn't care - VAT is separately on top of the invoiced price and you never treat it as your money, you're just holding it for the government for up to 30 days. > Then of course you sure have some percentage of buyers who cannot claim VAT (is it small, only consumers? what about not perfectly legal business.... ) Any business can claim VAT back if they choose to. Some countries allow small businesses to say "I don't care, don't bother me, I will eat the difference". This results in losses to the small business, it's done because the paperwork is really hard to do - takes a lot of time and money (you need an expensive tax advisor in many everyday cases). The usual limit of this is around 50k USD of yearly revenue. Above that, it's necessary to fill the VAT forms.
mrtksn 2y ago
It's interesting that they consulted with levelsio, who is a Dutch guy known for his successful small businesses: https://x.com/levelsio/status/1833126426142179653 https://x.com/levelsio/status/1833126426142179653

Words of wisdom by Mario Draghi > in fact, there is no EU company with a market capitalisation over EUR 100 billion that has been set up from scratch in the last fifty years, while all six US companies with a valuation above EUR 1 trillion have been created in this period. > This lack of dynamism is self-fulfilling.

oriettaxx 2y ago

the term "defence" is cited 82 times, in 62 pages This is the great European "New Deal", what a genius He'll be dead by the time we'll realize the effect of this 'great' move. Much much better the arc of St. Luis ;)

oriettaxx 2y ago
just replace the term "defence" with "weapons and military technology", or even more explicit with: "assalt rifles, machine guns, bombs, tanks, missiles, killer drones, ..." and you'll think twice about it. By the way, most of the "defence" industry in Italy did not pay VAT till last year where they had to align to EU directives (well, they may still not pay VAT for supply to arm force)... I have no doubt lobbiest worked a lot on convincing leaders to create jobs by manufactoring guns.
- throwaway48540 2y ago
  Why would I think twice about it? It's a no brainer given last few years. I just hope they also include artillery shells and cannons too. VAT is a tax levied on consumers, not companies/industries. Companies get it from consumers and forward it to the government, that's an optimization of enforcement, it doesn't mean companies pay it out of their pockets. Government pays companies back whatever VAT they paid on stuff they bought. It would make no sense for the government to pay VAT to itself when buying such expensive stuff; this is again a process optimization, not some fundamental change of how the tax works. Why would you need lobbyists when you have Putin just behind the door?
  - oriettaxx 2y ago
    > It would make no sense for the government to pay VAT to itself I've got it, but you agree with me that is weird that when the State buys from the private market they do have to pay VAT (even to themselves) while when that market is "defense" it may not happen? Then, of course, If I produce pistol (as a company), and buy metal, and make a pistol, don't I end up paying VAT on the "added value" ? in other way, even if a company sell to other companies, the VAT% (10% or 90%) does or does not affect profitability? Then of course you sure have some percentage of buyers who cannot claim VAT (is it small, only consumers? what about not perfectly legal business.... )
    - throwaway48540 2y ago
      When the state buys stuff, the paid VAT always goes right back to it. In some/many cases it's easier to eat this inefficiency, but in some cases it's easier to not do the useless transfer - especially when we're talking about tens of millions of euro and products that only the government can buy. I don't see anything weird about selecting few specific industries where the transactions are always with the government and in high amounts to optimize this useless transfer and bureaucratic busy work away. Nobody paid less taxes than they should have, nothing has changed about that. > Then, of course, If I produce pistol (as a company), and buy metal, and make a pistol, don't I end up paying VAT on the "added value" ? in other way, even if a company sell to other companies, the VAT% (10% or 90%) does or does not affect profitability? No, profitability is not affected in any way. The consumer always pays, not any company in the chain of raw material to consumer product. VAT is irrelevant to them, it's just some bureaucracy that needs to be taken care of, but nothing else. It could be 110% and they wouldn't care - VAT is separately on top of the invoiced price and you never treat it as your money, you're just holding it for the government for up to 30 days. > Then of course you sure have some percentage of buyers who cannot claim VAT (is it small, only consumers? what about not perfectly legal business.... ) Any business can claim VAT back if they choose to. Some countries allow small businesses to say "I don't care, don't bother me, I will eat the difference". This results in losses to the small business, it's done because the paperwork is really hard to do - takes a lot of time and money (you need an expensive tax advisor in many everyday cases). The usual limit of this is around 50k USD of yearly revenue. Above that, it's necessary to fill the VAT forms.

mrtksn 2y ago

It's interesting that they consulted with levelsio, who is a Dutch guy known for his successful small businesses: https://x.com/levelsio/status/1833126426142179653 https://x.com/levelsio/status/1833126426142179653