I have to confess, I’m not really feeling particularly fun this Friday. This past week was tax week.
And taxes aren’t fun.
When I was a kid, I thought people in elected offices were among the brightest and best. Then I grew up, started interacting with politicians and realized they are no smarter than anybody else. And in fact, a lot of them are downright dumb.
Well, I’ve got an Oklahoma lawmaker for you that fits neatly into the downright dumb category.
Every year, the Federal Reserve robs you of a little bit of your wealth.
And it does so by design.
Writing for the Sovereign Man, Jeff Thomas called it a “magic trick.” But it’s not magic in a mystical way. It’s magic in the show business sense of the word. It’s an illusion, facilitated by distraction that fools the audience. As a result, we all miss what’s actually happening.
An increase in the import duty hasn’t dampened Indians’ appetite for gold. It’s just pushed the market underground.
Gold is such an important part of the Indian economy, people will do whatever they have to in order to get their hands on the yellow metal – including skirt the law. According to a recent report by the Hindu, occurrences of gold smuggling have risen rapidly in the wake of higher import taxes.
Ever since the import duty on gold was raised to 10%, the country has reportedly witnessed a rapid rise in the quantum of gold brought into the country illegally. Currently, government levies total 13%, including IGST of 3%.”
Despite rising prices, a tax increase, and government attempts to tighten regulation of the jewelry industry, gold continues to flow into India.
Gold imports into the country nearly tripled year-on-year in August. An estimated 60 tons of the yellow metal flowed into the Asian nation last month, up from 22.3 tons in August 2017. This continues a trend for the year. Over the first 8 months of 2017, India’s gold imports climbed to 617.5 tons, a 158% increase over 2016.
While you may think of gold as a luxury item, many Indians view it as a necessity. In the Asian nation, buying gold is not just for the rich. In fact, a recent survey shows that possessing the yellow metal is a universal phenomenon across all income classes in India.
The yellow metal is interwoven into the country’s marriage ceremonies and cultural rites. Indians also value gold as a store of wealth, especially in poor rural regions. Two-thirds of India’s gold demand comes from these areas, where the vast majority of people live outside the official tax system. This explains why even the poor buy gold in India.
Analysts at the World Gold Council say they believe a new tax plan set to go into effect in India will ultimately boost demand for gold in the world’s second-largest market for the yellow metal.
On July 1, India’s current labyrinth of taxes will be replaced by a nationwide Goods & Services Tax (GST). The World Gold Council called it the “biggest fiscal reform since India’s liberalization in the early 1990s.”
While gold consumers will face a slightly higher tax rate, and the industry will go through a period of adjustment, we see the net impact on the gold industry as being positive. The gold supply chain should become more transparent and efficient, and the tax reform can boost economic growth, which we see as supporting gold demand.”
The Indian government set the tax rate for gold under the uniform goods and services tax lower than expected, sending a wave of optimism through the country’s gold and jewelry dealers. Analysts say the lower rate signals a potential recovery in demand for the yellow metal in the world’s second-largest market.
According to a Bloomberg report, India fixed the duty at 3% over the weekend, lower than the 5% expected.