Economist 5/2/16

  1. China completed the biggest reform of its taxation system in more than 20 years. The plan extends a value-added tax, previously imposed mainly on tangible goods, to firms involved in construction, property, finance and consumer services. It replaces a business tax, assessed on a company’s gross revenue. Officials say it will lighten tax burdens on businesses by 500 billion yuan ($77 billion) this year.Local authorities have to share VAT with the centre; the business tax, which went straight into their coffers, accounted for about 40% of local-government revenue.
  2. Back in February United and American Airlines announced they were joining Delta Air Lines in introducing“basic economy”, a new class of fare below standard.It removes the few perks that economy passengers still enjoy, chiefly the ability to select one’s seat before checking in.The early reviews were universally negative—except for the only one that counts.In the first three months of this year, the airline says, basic economy earned Delta an additional $20m in revenue. Delta is planning to expand the fare class beyond the roughly 1,650 routes (8% of the airline’s total routes) it currently serves.The introduction of basic economy could be greeted as part of a trend of good news for flyers: travelling by air is getting cheaper. The average US fare is now at its lowest level since 2010. Much of that can be attributed to lower fuel prices.
  3. FOR too long the Philippines was the sick man of Asia—cheerful, democratic but a chronic under performer. In recent years, though, its fortunes have begun to turn. Much of the credit should go to the outgoing president, Benigno Aquino. The economy is booming and investors are flocking in.But Mr Aquino’s achievements risk being squandered by an old weakness at the heart of Filipino politics: its love of showmanship and personality over policy and administrative ability.Ahead of the ballot on May 9th, the field is narrowing to two leading candidates. One is Grace Poe, a foundling, adopted daughter of an action-man actor and now a telegenic senator. She promises continuity with Mr Aquino’s pro-business policies, but her CV is thin and her campaign lamentably vacuous.The front-runner, Rodrigo Duterte, is downright alarming.He has spoken approvingly of vigilante killings of suspected criminals, and promises to clean up the country by executing 100,000 lawbreakers and dumping their bodies in Manila Bay.
  4. The leading candidates thus present voters with a ghastly choice between vapidity and vigilantism; neither shows any sign of being up to tackling the many serious issues facing an archipelago of some 100m people. The economic to-do list is long. For all the rosy growth figures, almost one-third of Filipinos, especially rural folk, live on less than $3.10 a day (a measure of poverty for middle-income countries). Cities remain crippled by gridlock; graft is still endemic.And despite Filipinos’ enthusiasm for democracy (the former dictator, Ferdinand Marcos, was evicted by a “people power” revolt in 1986) politics remains dominated by a few wealthy families—including Marcos’s son, a leading vice-presidential candidate.
  5. Mr Donald Trump conflates “over the top” with “luxury” and “expensive” with “quality”. His Trump International Hotel in Las Vegas is encased in “24-carat-gold-infused glass”. Crystal chandeliers and Italian marble adorn the lobby of that hotel as they do every one of his properties. The bathrooms on the Trump Shuttle, his short-lived airline (purchased at a dear price), were fitted with gold-plated faucets.All of that bling conveys a message to some people: I’ve made it. It is the American Dream.Those who dislike Mr Trump may find all of this vulgar. An Economist writer observed during this campaign that Mr Trump is “a poor-man’s idea of a rich man”, and that may very well define his appeal in both design and politics. This is a one-percenter who is hated by the rest of the one percent. In being reviled by the upper-crust establishment, he has tapped into the anger of a disaffected working class. In building garish monuments that the establishment finds disgusting, he found his public, and paved the way for himself as a brand. 

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