BUILDING PERMITS
In decentralised Denmark, if you want to carry out a building project, you have to pay a fee to the local authority in order to have it processed. The renovation of the local cinema, for example, cost us about £200.
All fair and reasonable. However, it turns out that some local authorities are not fair and reasonable, particularly when it comes to commercial buildings. My daily newspaper carried out a survey of all 98 local authorities of what it would cost to process a standard commercial building project of some 5,000 sqm. The range of costs was staggering. In a dozen or so local authorities, it costs less than kr.5,000 (roughly £500), the cheapest being the island of Ærø at kr.1,830. At the other end of the scale, the two capital city local authorities of Copenhagen and Frederiksberg charge more than kr.800,000!!
As the building industry rightly point out, this is a tax by another name.
Walter Blotscher
PS I am off to the U.K. and Kenya today for a week, back blogging next Saturday.
Saturday, 31 August 2013
Thursday, 29 August 2013
DANISH AGRICULTURE (6)
Danish agriculture is beginning to make money again; but not enough to be able to reduce its collective debts. Despite record low interest rates in recent years, the sector's debt has risen inexorably from kr.193 billion in 2002 to kr.362 billion in 2012.
One consequence is that farmers end up being tied to the land. The rules about farming are already quite strict - only a qualified farmer may live on, and work, a farm, for instance - so this simply makes the system even more inelastic. The new Business Minister Henrik Sass Larsen has made making agriculture more flexible his top priority. And rightly so.
Walter Blotscher
Danish agriculture is beginning to make money again; but not enough to be able to reduce its collective debts. Despite record low interest rates in recent years, the sector's debt has risen inexorably from kr.193 billion in 2002 to kr.362 billion in 2012.
One consequence is that farmers end up being tied to the land. The rules about farming are already quite strict - only a qualified farmer may live on, and work, a farm, for instance - so this simply makes the system even more inelastic. The new Business Minister Henrik Sass Larsen has made making agriculture more flexible his top priority. And rightly so.
Walter Blotscher
Wednesday, 28 August 2013
SYRIA (5)
To use a film analogy, Syria is looking increasingly like the third episode of the franchise Ill-Judged Foreign Intervention, following on from Ill-Judged Foreign Intervention I (Afghanistan) and Ill-Judged Foreign Intervention II (Iraq).
The plots of these films - and, since they take place for the vast majority of us on screens, they look pretty much like films - are remarkably similar. Bad things take place in far away places. Egoistic politicians, notably in medium-sized countries such as the U.K. and France that think they are still Great Powers, opine that "something must be done". Specious arguments about national security are usually added to the mix. Preparations are made for military intervention.
Since foreign military intervention in sovereign states is illegal under international law, attempts are made to get backing from the U.N. Security Council. These attempts get blocked, usually because Russia or China issues a veto. This is not acceptable to the egoistic politicians, so they seek ways to get round the impasse. Most of these are weasly, but are vigorously defended on the grounds of "moral imperative", "we owe it to the next generation" etc etc. Then there is military action; which goes on for a while, until everybody tires of it, and the same egoistic politicians try to get out of the mess that they have got into, while at the same time trumpeting its supposed successes. The country in question is left with a a lot of dead bodies, rubble and mess. But it's usually low level and so no longer makes the screens.
In the Syrian case, we haven't reached the end of the film, but we are coming to the last reel. Military intervention may well take place next week.
In saying this, I am in no way condoning what is happening in Syria. There are a lot of very bad people there, on both sides of the dispute. My point is merely that if large numbers of people want to kill each other in a modern state, then there is in fact very little that outsiders can do to stop it, unless and until the internal parties are ready to stop it. And there is much those outsiders can do to make it worse. You don't have to look to the Middle East or Central Asia to have this confirmed, what about Northern Ireland or even somewhere such as South Africa? It is only when the internal parties are willing to make the necessary compromises that the country concerned can move forward. External actors can nudge and prod, but they can't force compromise on people who don't want it.
In Syria, they don't want it; not yet, at any rate. But the powers in the West are not yet willing to accept that. The franchise still has life in it.
Walter Blotscher
To use a film analogy, Syria is looking increasingly like the third episode of the franchise Ill-Judged Foreign Intervention, following on from Ill-Judged Foreign Intervention I (Afghanistan) and Ill-Judged Foreign Intervention II (Iraq).
The plots of these films - and, since they take place for the vast majority of us on screens, they look pretty much like films - are remarkably similar. Bad things take place in far away places. Egoistic politicians, notably in medium-sized countries such as the U.K. and France that think they are still Great Powers, opine that "something must be done". Specious arguments about national security are usually added to the mix. Preparations are made for military intervention.
Since foreign military intervention in sovereign states is illegal under international law, attempts are made to get backing from the U.N. Security Council. These attempts get blocked, usually because Russia or China issues a veto. This is not acceptable to the egoistic politicians, so they seek ways to get round the impasse. Most of these are weasly, but are vigorously defended on the grounds of "moral imperative", "we owe it to the next generation" etc etc. Then there is military action; which goes on for a while, until everybody tires of it, and the same egoistic politicians try to get out of the mess that they have got into, while at the same time trumpeting its supposed successes. The country in question is left with a a lot of dead bodies, rubble and mess. But it's usually low level and so no longer makes the screens.
In the Syrian case, we haven't reached the end of the film, but we are coming to the last reel. Military intervention may well take place next week.
In saying this, I am in no way condoning what is happening in Syria. There are a lot of very bad people there, on both sides of the dispute. My point is merely that if large numbers of people want to kill each other in a modern state, then there is in fact very little that outsiders can do to stop it, unless and until the internal parties are ready to stop it. And there is much those outsiders can do to make it worse. You don't have to look to the Middle East or Central Asia to have this confirmed, what about Northern Ireland or even somewhere such as South Africa? It is only when the internal parties are willing to make the necessary compromises that the country concerned can move forward. External actors can nudge and prod, but they can't force compromise on people who don't want it.
In Syria, they don't want it; not yet, at any rate. But the powers in the West are not yet willing to accept that. The franchise still has life in it.
Walter Blotscher
Sunday, 25 August 2013
A TALE OF TWO CHERRY TREES
The autumn before last, I finished off my new lawn by planting two cherry trees which I bought from my cherry farmer neighbour. He said that nothing would happen the first year, but that from the second year, they would take hold.
One duly has, as you can see below ......
The autumn before last, I finished off my new lawn by planting two cherry trees which I bought from my cherry farmer neighbour. He said that nothing would happen the first year, but that from the second year, they would take hold.
One duly has, as you can see below ......
..... but the other one has not.
I suppose that one out of two isn't bad.
Walter Blotscher
Saturday, 24 August 2013
TAX TRUST
If you have the highest tax take of any country in the world, as Denmark does, then it makes sense to have a tax authority that all of your citizens can trust. Unfortunately, Danish citizens' trust in Skat has taken a series of major knocks in recent months.
First, there has been the drip, drip of revelations relating to the case of the tax status of Stephen Kinnock, the British wife of Prime Minister Helle Thorning-Schmidt. It is still not clear exactly who did what, and when (an official commission is busy digging); but it seems as if various officials, notably the Head of the Tax Ministry, interfered in order to try and get a politically satisfactory result.
Secondly, it is clear that Skat went aggressively after people they thought were trying to evade tax. So aggressively in fact, that they may have broken the law. Lawyers are currently collating evidence that may lead to these officials' being fired.
However, it is the latest revelations that will have had the worst impact, since they apply to many, many taxpayers. It turns out that since 2003, when Skat was given responsibility for valuing property for tax purposes, up to three out of every four valuations have been wrong. Even worse, both Skat and the six Tax Ministers who have held the post since then, have known about the problems and done nothing about them.
In Denmark, property taxes are an important part of local authority finance. From a tax administration point of view, they are good taxes. There are fewer properties than there are people, they tend not to move or hide themselves, and taxing them is broadly progressive (bigger houses are generally owned by richer people). Furthermore, taxing property helps to dampen speculative bubbles. The only disadvantage is that they tend to be paid in one go, so taxpayers know (in contrast to, say, VAT) exactly how much they pay each year.
Although some people will have gained from Skat's mess-up, they are unlikely to shout very loudly. Those adversely affected will, however, shout very loudly indeed. In other words, this is an unmitigated disaster for the tax authorities, and yet another blow to Denmark's famous welfare society.
Walter Blotscher
If you have the highest tax take of any country in the world, as Denmark does, then it makes sense to have a tax authority that all of your citizens can trust. Unfortunately, Danish citizens' trust in Skat has taken a series of major knocks in recent months.
First, there has been the drip, drip of revelations relating to the case of the tax status of Stephen Kinnock, the British wife of Prime Minister Helle Thorning-Schmidt. It is still not clear exactly who did what, and when (an official commission is busy digging); but it seems as if various officials, notably the Head of the Tax Ministry, interfered in order to try and get a politically satisfactory result.
Secondly, it is clear that Skat went aggressively after people they thought were trying to evade tax. So aggressively in fact, that they may have broken the law. Lawyers are currently collating evidence that may lead to these officials' being fired.
However, it is the latest revelations that will have had the worst impact, since they apply to many, many taxpayers. It turns out that since 2003, when Skat was given responsibility for valuing property for tax purposes, up to three out of every four valuations have been wrong. Even worse, both Skat and the six Tax Ministers who have held the post since then, have known about the problems and done nothing about them.
In Denmark, property taxes are an important part of local authority finance. From a tax administration point of view, they are good taxes. There are fewer properties than there are people, they tend not to move or hide themselves, and taxing them is broadly progressive (bigger houses are generally owned by richer people). Furthermore, taxing property helps to dampen speculative bubbles. The only disadvantage is that they tend to be paid in one go, so taxpayers know (in contrast to, say, VAT) exactly how much they pay each year.
Although some people will have gained from Skat's mess-up, they are unlikely to shout very loudly. Those adversely affected will, however, shout very loudly indeed. In other words, this is an unmitigated disaster for the tax authorities, and yet another blow to Denmark's famous welfare society.
Walter Blotscher
Friday, 23 August 2013
THE LITTLE MERMAID
Today is exactly 100 years since the statue the Little Mermaid was erected in Copenhagen harbour.
I have to say that I have never understood why everyone gets so excited by the Little Mermaid. I first saw it when I was inter-railing around Scandinavia as a 17-year old back in 1977, and my first impression of it was that it was, well, little. It also had a couple of Japanese tourists hanging all over it, which rather spoiled its charm.
Since then, it hasn't got any bigger, but the number of Japanese - and other- tourists certainly has. For some reason, they all seem to think it's great. Each to his own, I suppose.
Walter Blotscher
Today is exactly 100 years since the statue the Little Mermaid was erected in Copenhagen harbour.
I have to say that I have never understood why everyone gets so excited by the Little Mermaid. I first saw it when I was inter-railing around Scandinavia as a 17-year old back in 1977, and my first impression of it was that it was, well, little. It also had a couple of Japanese tourists hanging all over it, which rather spoiled its charm.
Since then, it hasn't got any bigger, but the number of Japanese - and other- tourists certainly has. For some reason, they all seem to think it's great. Each to his own, I suppose.
Walter Blotscher
Wednesday, 21 August 2013
VESTAS
Vestas used to be a bit like Nokia; a Scandinavian champion that was the world's leading company in a sector, wind power, that seemed to be inexorably growing. Its hyperactive boss, Ditlev Engel, was an omnipresent figure at international gatherings of the good and the great. Denmark, a small country on the edge of an increasingly irrelevant continent, could still cut the mustard in some things.
Today Nokia is a shadow of its former self, as it has been overtaken by Apple and then Samsung. And so too is Vestas. When Mr Engel took over as Chief Executive on 1 May 2005, the share price was a lowly kr.73,50. During the next three years, there was only one way for it to go, as there was lots of money to go around and orders rolled in. The price topped on 17 June 2008 at kr.692, giving the company a market value of almost kr.130 billion. Four months later, Mr. Engel was duly crowned as Denmark's leader of the year.
Yet even at the moment of its greatest triumph, there were problems. Making windmills turned out to be not that difficult, and other countries could do it much more cheaply than expensive Danes. Furthermore, wind power remained uneconomic compared with fossil fuels and other forms of energy; when the financial crisis hit in 2008, the subsidies dried up. Only a few months after being crowned leader of the year, Mr. Engel was forced to announce a pre-tax loss for 2008 of kr.4.9 billion and a kr.6 billion rights issue.
Since then the share price has been in freefall. The bottom was reached last November when it hit kr.24. Since then, Mr. Engel's days have been numbered; the only question was when he would have to go. The answer to that was today.
Investors still believe that Vestas has a future; despite continuing losses in 2013, the share price is back up to kr.109, and it rose 5% on news of Mr. Engel's demise. However, while the shares are owned by many thousands of ordinary Danes, I wouldn't recommend buying them. The best that Vestas can hope for is to be bought up by one of those lower-cost competitors. Wind power is a good idea, and it may well turn out to be economic at some point in the future (though the shale gas revolution is pushing that point further and further away); it just won't be economic if Danes are making the kit.
Walter Blotscher
Vestas used to be a bit like Nokia; a Scandinavian champion that was the world's leading company in a sector, wind power, that seemed to be inexorably growing. Its hyperactive boss, Ditlev Engel, was an omnipresent figure at international gatherings of the good and the great. Denmark, a small country on the edge of an increasingly irrelevant continent, could still cut the mustard in some things.
Today Nokia is a shadow of its former self, as it has been overtaken by Apple and then Samsung. And so too is Vestas. When Mr Engel took over as Chief Executive on 1 May 2005, the share price was a lowly kr.73,50. During the next three years, there was only one way for it to go, as there was lots of money to go around and orders rolled in. The price topped on 17 June 2008 at kr.692, giving the company a market value of almost kr.130 billion. Four months later, Mr. Engel was duly crowned as Denmark's leader of the year.
Yet even at the moment of its greatest triumph, there were problems. Making windmills turned out to be not that difficult, and other countries could do it much more cheaply than expensive Danes. Furthermore, wind power remained uneconomic compared with fossil fuels and other forms of energy; when the financial crisis hit in 2008, the subsidies dried up. Only a few months after being crowned leader of the year, Mr. Engel was forced to announce a pre-tax loss for 2008 of kr.4.9 billion and a kr.6 billion rights issue.
Since then the share price has been in freefall. The bottom was reached last November when it hit kr.24. Since then, Mr. Engel's days have been numbered; the only question was when he would have to go. The answer to that was today.
Investors still believe that Vestas has a future; despite continuing losses in 2013, the share price is back up to kr.109, and it rose 5% on news of Mr. Engel's demise. However, while the shares are owned by many thousands of ordinary Danes, I wouldn't recommend buying them. The best that Vestas can hope for is to be bought up by one of those lower-cost competitors. Wind power is a good idea, and it may well turn out to be economic at some point in the future (though the shale gas revolution is pushing that point further and further away); it just won't be economic if Danes are making the kit.
Walter Blotscher
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