Category Archives: Fiscal Freedom

A member of the Senate Armed Services and Intelligence Committee is calling for a $26 billion addition to this years emergency defense spending bill to rebuild readiness starting with increased flying and training times and increasing the end-strength of the Army and Marine Corps.

Most [of the immediate spending agenda] comes from the service chiefs unfunded priority lists, Sen. Tom Cotton (R-Ark.), said during his remarks at AEI on Monday.

We need more of just about everything, including modernized nuclear forces. Nuclear strategy can no longer be bilateral [between Washington and Moscow] because China and North Korea, both potential adversaries, are nuclear powers.

He added he also was backing a 15 percent increase in defense spending for the upcoming fiscal year.

Our defense budget is not responsible for our national debt, he said in answer to an audience question.

I think we can find the money for the supplemental increase and for the upcoming fiscal year and not upset the Freedom Caucus deficit hawks. In part, Cotton said this would come from having a new administration and a majority in Congress both saying that each dollar increase in defense spending does not have to be matched on domestic programs.

Cotton also warned allies and partners that no alliance should be a one-way street, and they need to spend two percent of their gross domestic product on their own security, not military pensions.

Right now we have to strengthen the bilateral alliances the United States has with Japan and South Korea and work for better ties with India and countries, such as Myanmar [Burma] that dont want to be vassal states of China. We have to give them more incentives to stay with us and that includes the Philippines and Thailand, two allies who have been distancing themselves from the United States in recent months.

The United States itself and all its partners need to understand they are engaged in global geo-political competition, particularly with Russia in Eastern Europe and China in the East and South China seas.

The Big Stick is important, Cotton said, not only recalling President Theodore Roosevelt, who first used the term in 1901 as a corollary to the Monroe Doctrine, but also President Ronald Reagans position on rebuilding the military and meeting the challenge from the Soviet Union when he took office in 1981.

In dealing with Moscow and Beijing, we have to negotiate with them in a position of strength.

Cotton said President Donald Trumps policy to the Russia is yet to be determined and should not be judged on a few comments he made. He cited Ambassador to the United Nations Nicki Haleys recent remarks condemning Russia on renewed fighting in eastern Ukraine as showing what the administrations policy will be.

In answer to a question, he said, We should not recognize a single inch of soil where Russian troops stand in Ukraine as belonging to Moscow. He added he doubted that Russia would have seized Crimea and backed separatists in eastern Ukraine if Kiev retained the nuclear arsenal on its soil when the Soviet Union collapsed.

As for the president of Russia, Vladimir Putin is KGB, always will be. Cotton was skeptical about working with Moscow in Syria, a country where the United States now find its allies fighting each other [Kurds fighting Turks]. He said other partners in the region are leery of involvement in the Syrian civil war. They are not going to install a [Muslim] Brotherhood or Quds Force government in Damascus to replace President Bashar al-Assad.

The Muslim Brotherhood briefly governed Egypt following the Arab Spring. The Quds Force is a special forces unit of Irans Revolutionary Guard and is operating in Syria in support of Assad

In his remarks, Cotton said Trumps America First rhetoric resonates with most of the public. He termed it plain spoken nationalism in the manner of President Andrew Jackson.

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Cotton Calls for a $26B Uptick in Planned Defense Supplemental - USNI News

With the government now delivering on the anticipated direction of fiscal adjustment for FY18, the markets have now turned their attention towards the upcoming monetary policy review on 8 February. After the Reserve Bank of India (RBI) stayed pat against the consensus expectation of a 25 basis point (bps) cut in its December policy review, the rate cut expectation got immediately repositioned for the next policy review in February. With signs of prudence, rectitude and discipline displayed by the FY18 Union budget, such expectations of monetary policy easing have gained further currency.

However, if one were to extrapolate the Monetary Policy Committees (MPCs) December policy stance, then it leaves a sense of disquiet. Two factors that weighed on the policy decision in favour of status quo were:

increase in global commodity prices

tightening of global financial conditions

ALSO READ: Is RBI better placed now?

Both these factors continue to receive much policy attention. Market forecasts for crude oil in 2017 have inched closer to $60 per barrel levels from an average price of $44 per barrel in 2016. The US Federal Reserve, after raising the policy rate by 25 bps in December, projected a higher-than-anticipated trajectory of a 75 bps cumulative hike for 2017. These could raise external sector risks, leading to a potential build-up of imported inflation. However, these risks are likely to be moderate, with oil price increase contributing about 20 bps to retail inflation and strength in foreign direct investment (FDI) inflows ensuring stable financing of the current account deficit.

Moreover, with FY17 approaching its end, a few MPC members have highlighted the need to start focusing on the mid-point of the governments notified medium-term inflation target of 4% (plus or minus 2%). This could significantly reduce the degree of freedom with respect to policy discretion on incremental monetary easing.

Could the RBI then endorse consensus?

Despite the above mentioned risks, there could still be room to ease monetary policy. Consider the following:

1. Lets look at the policy anchor, consumer price index (CPI) inflation. From an average level of 4.9% in FY16, CPI inflation is now poised to moderate towards 4.6% in FY17. Although the central bank projected March 2017 CPI inflation at 5%, the same as its target for the current financial year, there is a strong likelihood of actual inflation undershooting the target by a significant margin of 60-80 bps.

The story behind moderating CPI inflation is not just restricted to food. In fact, demand side pressures have also been moderating as reflected in the core-core inflation trend (4.8% during Apr-Dec FY17 vis--vis 5.4% in the corresponding period in FY16).

2. While there could be some near-term upside pressure on inflation from implementation of the 7th Central Pay Commission (CPC) allowances and goods and services tax (GST) in FY18, the policymakers should, in my opinion, be ignoring them as both can be construed as technical impacts. Moreover, the former is unlikely to result in second-order impact via spillovers, especially post demonetization and the drive towards better tax compliance. The latter is a structural reform, which, post adjustment effects in FY18, is widely expected to lower inflationary pressures in the medium term.

3. According to the recently presented Economic Survey, the impact of demonetization on FY17 gross domestic product (GDP) growth is likely to be around 25-50 bps, greater than RBIs estimate of 15-20 bps provided in the December policy review. This could continue to keep pricing power at subdued levels in the near future.

4. There are many fascinating aspects about the fiscal policy (for both FY17 and FY18). Despite the burden of one rank one pay (OROP) and the 7th CPC, the government has been able to tighten the headline fiscal balance by 0.7% of GDP over the two year period. Considering that past pay commissions had willy-nilly led to deterioration in the governments fiscal health, this stands out as an impressive achievement. This could serve as a model for replication in fiscal management for state governments who would be implementing their pay commissions over the next one to two years. However, this is not where the story ends.

ALSO READ: Will a rate cut be a wasted action by RBI?

(i)The government has been mindful of the need to preserve the quality of fiscal adjustment. According to revised estimates, capital expenditure for FY17 is now expected to be higher (10.6% growth) than what was budgeted initially (3.9% growth). For FY18, capital expenditure is expected to follow a similar trend of 10.7% growth. This would be greater than the budgeted revenue expenditure growth of 5.9% for FY18.

(ii) Allocation for subsidies at 1.6% of GDP would be the lowest in nine years.

(iii) For FY18, by budgeting for a revenue deficit of 1.9% of GDP, the government will outperform its Fiscal Responsibility and Budget Management (FRBM) target of 2%.

(iv) Primary deficit is now on the verge of getting eliminated. The FY18 target of 0.1% of GDP for primary deficit would be the lowest in a decade.

5. There has been significant acceleration in monetary policy transmission, with most banks reducing their marginal cost of funds-based lending rate (MCLR) by 75-100 bps since the beginning of demonetization. This is expected to be viewed favourably by RBI.

With global financial and commodity markets now stabilizing, on balance, I believe there is a prima facie case for a 25 bps rate cut in February. With inflation remaining benign, delaying monetary accommodation at this stage could disproportionately increase the sacrifice ratio for the economy.

Shubhada Rao is chief economist at Yes Bank Ltd.

First Published: Tue, Feb 07 2017. 01 06 AM IST

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Making the case for an RBI rate cut - Livemint

By: PTI | New Delhi | Updated: February 4, 2017 1:05 pm Shaktikanta Das, Economic Affairs Secretary. (Source: File photo)

Stepping up the growth pitch, Economic Affairs Secretary Shaktikanta Das on Saturday expressed confidence that the economy will grow upwards of 7 per cent next fiscal. For this years GDP growth, we have to wait till March-end. But next year, it will be upwards of 7 per cent, he said. Drawing on Finance Minister Arun Jaitleys statements, the secretary said there will be transient impact of demonetisation on the economy, but it will not spill over to the next fiscal.

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A large part of economy is moving towards digital transactions, he noted. Despite the global headwinds, Das said Indias growth remains much stronger. It has stayed afloat. Not only stayed afloat, but also doing well. Our commitment is to push growth momentum, he explained.

Listing various reforms measures as announced in the Budget, Das spoke of gains for farmers from integration of spot and derivative market in commodity. He also dubbed announcement on contract farming and UGC as very big reforms.

Speaking at the seminar, Finance Secretary Ashok Lavasa said the government has already implemented 54 per cent of the recommendations of the Expenditure Management Commission. There are many more which are in the process of being addressed, he said. We are in the process of revising our General Financial Rules (GFR). These are the rules by which all government expenditure is controlled and regulated.

GFR is a compendium of general provisions to be followed by all offices of the central government while dealing with matters of financial nature.

These were first issued in 1947 and last amended in 2010. However, it is felt that many of the rules have become redundant in view of rapid growth of alternative service delivery systems, developments in information technology, outsourcing of services and liberalisation of the system of procurement.

He said it was sometimes felt by the private sector that these rules have been constraining the freedom of decision making. So, we are in the process of amending the GFR and before March 31. It is our endeavour to produce a revamped document which recognises the modern ways of management, he said.

Lavasa also said there will be efforts to increase the number of goods and services which can be procured through e-marketplace. On centrally sponsored schemes (CSS), he said the CSS were reviewed and their number has been brought down to 28. Similarly, central sector schemes have been rationalised and the exercise is not completed. We will continue to rationalise these schemes. The objective being that the government should focus on doing a few critical things and utilise resources to derive benefit of people, he added.

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Economy to grow more than 7 per cent next fiscal: Shaktikanta Das - The Indian Express

No one will really understand politics until they understand that politicians are not trying to solve our problems. They are trying to solve their own problems - of which getting elected and re-elected are No. 1 and No. 2. Whatever is No. 3 is far behind. Thomas SowellThe Indiana General Assembly opened its session in January. It is now the fifth straight year Republicans have had a Democrat-proof supermajority in both House and Senate. You would think by now they would have enacted into law every one of the core beliefs in the GOP Platform (limited government, federalism, freedom from government interference, sanctity of life, second amendment, fiscal responsibility and so forth).Plenty of bills were introduced supporting these beliefs but few saw the light of day. Instead, we have spending increases and new government programs. And this year, House Speaker Brian Bosma is proposing a tax increase. What happened?For the answer you need to know how a bill really becomes a law. I dont mean the School House Rock Im Just a Bill version, Im talking about the follow-the-money version. At its center is the House Republican Campaign Committee (HRCC), a group unaccountable to and outside of the democratic process. This committee nonetheless is the most powerful political organization in Indiana. Most House GOP legislators have surrendered control of their election campaign - fundraising, planning, spending to the HRCC with the promise that the HRCC (and political consultant Mark It Red) will protect incumbent Republicans if they face a challenger in the next election.And thats how they keep getting re-elected. Today, when a legislator gets campaign donations you can bet they turn over the lions share to the HRCC, often $10,000 or more at a time. The HRCC brought in over $2.3 million in 2016 alone. And this gives its chairman, Brian Bosma, incredible leverage.Bosma already has huge influence as Speaker. He alone decides which bill is assigned to which committee. He alone appoints every member of those committees ,including chairmen. In turn, a chairman has absolute power to decide if a bill gets a hearing or dies in committee. Its probably no coincidence that most chairmen make huge donations to Bosmas HRCC.In the end, a bill is passed because Mr. Bosma wants it to, because it was just easier for the other Republicans to go-along-to-get-along and not risk their HRCC protection money that and loyalty could mean a chairmanship one day. Bucking the system could mean losing campaign funding and (gasp) losing the next election. Principle quickly takes a back seat.What influences Bosma and his legislative agenda each year? If campaign finance reports are any indication, its the political action committees (PACs) and those who fund him.In the last four years his personal campaign accepted $2.2 million, his biggest contributors being Indiana Merit Construction PAC, Indiana Multi Family Housing PAC, Zink Properties LLC, Build Indiana PAC, and billionaire Dean White also plopped down $500,000.But because committee chairmen are bringing in so much money to the HRCC, Bosma is influenced by their donors as well. And it should come as no surprise that Build Indiana PAC (lobbying for road construction companies) made big donations to most of his committee chairmen, most notably Ed Soliday (Roads and Transportation) and Tim Brown (Ways and Means) who each got $12,000. People looking to buy influence know who has influence. Bosma, Brown and Soliday received more campaign contributions than anyone in the House in 2016 (January-October).So how does a bill become law? The PACs give Bosma his marching orders, Bosma (with his HRCC carrot) gives legislators theirs, and the HRCC kills deliberation.John Pickerill, former chairman of the Montgomery County Republican Party, wrote this for the Indiana Policy Review Foundation.

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To see how a bill becomes law, follow the money - News Sentinel

America is at a tipping point. For far too long, politicians have kicked the can down the road without regard for future generations. Our country can no longer afford such reckless leadership. Today, America is over 15.6 trillion dollars in debt with deficits as far as the eye can see. Taxes are going up, the dollar is losing value and unemployment continues to worsen. All of this is happening while politicians in Washington continue to recklessly spend taxpayer dollars. As Patriots, we have a duty to stop the dangerous politics as usual!

When the dollar loses its status as the world's reserve currency, will you get involved? When interest rates soar and inflation is running rampant, will you get involved? When taxes are raised to the sky high rates of Europe to fund the entitlement crisis, will you get involved? Or maybe you will get involved when unemployment is worse than anytime in history?

There is still a chance to restore liberty and freedom in America. By sending principled fiscal conservatives to Washington, we can change policy. Together, we can defeat the problematic politicians that violate their Constitutional obligations and grow government. With a grassroots army and a message that resonates with mainstream Americans, Patriots for Economic Freedom can force politicians to listen.

No longer will politicians carelessly cave into special interests without fearing repercussions. Citizens are uniting and becoming a potent lobbying force. While big labor, Wall Street and other special interests have dominated the debate for years, Patriots for Economic Freedom serves as the "citizen lobbyist" for mainstream Americans fed up with out of control spending. We may not have billions of dollars on our side but we do have a powerful army of people. Together, our presence is stronger than any lobbyist or special interest. We can do this! We can take our country back!

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Patriots For Economic Freedom

A fiscal year (or financial year, or sometimes budget year) is a period used for calculating annual ("yearly") financial statements in businesses and other organizations all over the world. In many jurisdictions, regulatory laws regarding accounting and taxation require such reports once per twelve months, but do not require that the period reported on constitutes a calendar year (that is, 1 January to 31 December). Fiscal years vary between businesses and countries. The "fiscal year" may also refer to the year used for income tax reporting.

The 'fiscal year end' (FYE) is the date that marks the end of the fiscal year. Some companies choose to end their fiscal year such that it ends on the same day of the week each year, e.g. the day that is closest to a particular date (for example, the Friday closest to 31 December). Under such a system, some fiscal years will have 52 weeks and others 53 weeks. A major corporation that has adopted this approach is Cisco Systems.[1]

Nevertheless, the fiscal year is identical to the calendar year for about 65% of publicly traded companies in the United States and for a majority of large corporations in the UK[2] and elsewhere (with notable exceptions Australia, New Zealand and Japan).[3]

Many universities have a fiscal year which ends during the summer, both to align the fiscal year with the academic year (and, in some cases involving public universities, with the state government's fiscal year), and because the school is normally less busy during the summer months. In the northern hemisphere this is July in one year to June in the next year. In the southern hemisphere this is January to December of a single calendar year.

Some media/communication based organizations use a broadcast calendar as the basis for their fiscal year.

The fiscal year is usually denoted by the year in which it ends, so United States of America federal government spending incurred on 14 November 2016 would belong to fiscal year 2017, operating on a fiscal calendar of OctoberSeptember.[4]

The NFL uses the term "league year," which in effect forms the league's fiscal year. By rule, the fiscal year begins at 4 PM EDT on 10 March of each calendar year. All financial reports are based on each fiscal year. However, the fiscal year is denoted in the NFL by the year where it starts, not where it ends, unlike most designations.

In some jurisdictions, particularly those that permit tax consolidation, companies that are part of a group of businesses must use nearly the same fiscal year (differences of up to three months are permitted in some jurisdictions, such as the U.S. and Japan), with consolidating entries to adjust for transactions between units with different fiscal years, so the same resources will not be counted more than once or not at all.[citation needed]

In Afghanistan, the fiscal year was recently changed from 1 Hamal - 29 Hoot (21 March - 20 March) to 1 Jadi - 30 Qaus (21 December - 20 December). The fiscal year runs with the Afghan calendar, thus resulting in difference of the Gregorian dates once in a four-year span.[citation needed]

In Australia, the fiscal year or, more commonly, "financial year", starts on 1 July and ends on 30 June. For personal income tax after the financial year ends, individuals have until 31 October to lodge their return (unless they use a tax agent).[5] This fiscal year definition is used both for official purposes and by the overwhelming majority of private enterprises, but this is not legally mandated.[6] A company may, for example, opt for a financial year that always ends at the end of a week (and therefore is not exactly one calendar year in length), or opt for each financial year to end on a different date to match the reporting cycles of its foreign parent.

In Austria the fiscal year is the calendar year, January 1st - December 31st.

In Bangladesh, the fiscal year starts on 1 July and ends on 30 June.

In Belarus, the fiscal year starts on 1 January and ends on 31 December.

In Brazil, the fiscal year starts on 1 January and ends on 31 December. Citizens pay income tax (when needed) starting in May, but the form filling goes from March to April. All tax declarations must be done on-line using government written free software.[citation needed]

In Bulgaria, the fiscal year matches the calendar year both for personal income tax [7] and for corporate taxes.[8]

In Canada,[9] the government's financial year runs from 1 April to 31 March (Example 1 April 2016 to 31 March 2017 for the current financial year).

For individuals in Canada, the fiscal year runs from 1 January to 31 December.

The fiscal year for all entities starts on 1 January and ends 31 December, consistent with the calendar year, to match the tax year, statutory year, and planning year.[citation needed]

In Colombia, the fiscal year starts 1 January ending on 31 December. Yearly taxes are due in the middle of March/April for corporations while citizens pay income tax (when needed) starting in August, ending in September, according to the last 2 digits of the national ID.[citation needed]

The fiscal year in Costa Rica spans from 1 October until 30 September. Taxpayers are required to pay the tributes before 15 December of each year.[citation needed]

In the Arab Republic of Egypt, the fiscal year starts on 1 July and concludes on 30 June.[citation needed]

The fiscal year matches the calendar year, and has since at least 1911.[10]

In the Hellenic Republic, the fiscal year starts on 1 January and concludes on 31 December.

In Hong Kong,[11] the government's financial year runs from 1 April to 31 March (Example 1 April 2016 to 31 March 2017 for the current financial year).

In India, the government's financial year runs from 1 April to 31 March midnight. Example: 1 April 2016 to 31 March 2017 for the financial year 20162017. It is also abbreviated as FY17.[12][13]

Companies following the Indian Depositary Receipt (IDR) are given freedom to choose their financial year. For example, Standard Chartered's IDR follows the UK calendar despite being listed in India. Companies following Indian fiscal year get to know their economical health on 31 March of every Indian financial or fiscal year.

There was discussions by the newly formed NITI Aayog, in the month of July 2016,in a meeting organised by the PM Modi, that the next fiscal year may start from 1 January to 31 December after the end of the current five-year plan.[14]

In Iran, the fiscal year starts usually on March 21 (1st of Farvardin) and concludes on next year's March 20 (29th of Esfand) in Solar Hijri calendar [15]

Ireland used the year ending 5 April until 2001 when it was changed, at the request of Finance Minister Charlie McCreevy, to match the calendar year (the 2001 tax year was nine months, from April to December)[citation needed]

Since 2002, it is aligned with the calendar year: 1 January to 31 December.[16]

In Israel the fiscal year is from 1 January until 31 December.[17]

In Italy the fiscal year was from 1 July to 30 June until 1965; now it is from 1 January until 31 December.[citation needed]

In Japan,[18] the government's financial year runs from 1 April to 31 March. The fiscal year is represented by the calendar year in which the period begins, followed by the word nendo (); for example the fiscal year from 1 April 2016 to 31 March 2017 is called 2016nendo.

Japan's income tax year runs from 1 January to 31 December, but corporate tax is charged according to the corporation's own annual period.[citation needed]

In Macau, the government's financial year runs from 1 January to 31 December (Example 1 January 2016 to 31 December 2016 for the current financial year).

In Mexico the fiscal year starts on January 1 and ends on December 31.

In Myanmar,[19] the fiscal year goes from 1 April to 31 March.

The fiscal year in Nepal starts from Shrawan 1 (4th month of Bikram calendar) and ends on Ashad 31 (3rd month of Bikram calendar). Shrawan 1 roughly falls on mid July.[20]

The New Zealand Government's fiscal[21] and financial reporting[22] year begins on 1 July and concludes on 30 June[23] of the following year and applies to the budget. The company and personal financial year[24] begins on 1 April and finishes on 31 March and applies to company and personal income tax.

The Pakistan Government's fiscal year starts on 1 July of the previous calendar year and concludes on 30 June. Private companies are free to observe their own accounting year, which may not be the same as Government of Pakistan's fiscal year.[citation needed]

In Portugal the fiscal year starts on January 1 and ends on December 31.

The fiscal year matches the calendar year, and has since at least 1911.[10]

The fiscal year for the calculation of personal income taxes runs from 1 January to 31 December.[citation needed]

The fiscal year for the Government of Singapore and many government-linked corporations runs from 1 April to 31 March.[citation needed]

Corporations and organisations are permitted to select any date to mark the end of each fiscal year, as long as this date remains constant.[citation needed]

In South Africa the fiscal year for the Government of South Africa starts on 1 April and ends 31 March.[citation needed]

The year of assessment for individuals covers twelve months, beginning on 1 March and ending on the final day of February the following year. The Act also provides for certain classes of taxpayers to have a year of assessment ending on a day other than the last day of February. Companies are permitted to have a tax year ending on a date that coincides with their financial year. Many older companies still use a tax year that runs from 1 July to 30 June, inherited from the British system. A common practice for newer companies is to run their tax year from 1 March to the final day of February following, to synchronize with the tax year for individuals.[citation needed]

In South Korea(Republic of Korea) the fiscal year starts on 1 January and ends 31 December.[citation needed]

In Spain the fiscal year starts on 1 January and ends 31 December.[25]

The fiscal year for individuals runs from 1 January to 31 December.[26]

The fiscal year for an organisation is typically one of the following (cf. Swedish Wikipedia):

However, all calendar months are allowed. If an organisation wishes to change into a non-calendar year, permission from the Tax Authority is required.[27][28]

Under the Income Tax Act of Taiwan, the fiscal year commences on 1 January and ends on 31 December of each calendar year. However, an enterprise may elect to adopt a special fiscal year at the time it is established and can request approval from the tax authorities to change its fiscal year.[29]

The Thai government's fiscal year (FY) begins on 1 October and ends on 30 September of the following year.[30] FY2015 dates from 1 October 2014 30 September 2015. The Thai government's year for individual income tax is the calendar year (1 January 31 December)

In Ukraine, the fiscal year matches with the calendar year which starts on 1 January and ends 31 December.

In the United Arab Emirates, the fiscal year starts on 1 January and ends 31 December.[citation needed]

In the United Kingdom,[31] the financial year runs from 1 April to 31 March for the purposes of corporation tax[32] and government financial statements.[33] For the self-employed and others who pay personal tax the fiscal year starts on 6 April and ends on 5 April of the next calendar year.[34]

Although United Kingdom corporation tax is charged by reference to the government's financial year, companies can adopt any year as their accounting year: if there is a change in tax rate, the taxable profit is apportioned to financial years on a time basis.[citation needed]

A number of major corporations that were once government-owned, such as BT Group and the National Grid, continue to use the government's financial year, which ends on the last day of March, as they have found no reason to change since privatisation.[citation needed]

The 5 April year end for personal tax and benefits reflects the old ecclesiastical calendar, with New Year falling on 25 March (Lady Day), the difference being accounted for by the eleven days "missed out" when Great Britain converted from the Julian Calendar to the Gregorian Calendar in 1752 (the British tax authorities, and landlords were unwilling to lose 11 days of tax and rent revenue, so under provision 6 (Times of Payment of Rents, Annuities, &c.) of the Calendar (New Style) Act 1750, the 17523 tax year was extended by 11 days). From 1753 until 1799, the tax year in Great Britain began on 5 April, which was the "old style" new year of 25 March. A 12th skipped Gregorian leap day in 1800 changed its start to 6 April. It was not changed when a 13th Julian leap day was skipped in 1900, so the start of the personal tax year in the United Kingdom is still 6 April.[35][36][37]

The United States federal government's fiscal year is the 12-month period ending on 30 September of that year, having begun on 1 October of the previous calendar year. In particular, the identification of a fiscal year is the calendar year in which it ends; thus, the current fiscal year is 2017, often written as "FY2017" or "FY17", which began on 1 October 2016 and which will end on 30 September 2017.

Prior to 1976, the fiscal year began on 1 July and ended on 30 June. The Congressional Budget and Impoundment Control Act of 1974 made the change to allow Congress more time to arrive at a budget each year, and provided for what is known as the "transitional quarter" from 1 July 1976 to 30 September 1976. An earlier shift in the federal government's fiscal year was made in 1843, shifting the fiscal year from a calendar year to one starting on 1 July.[38]

For example, the United States government fiscal year for 2017 is:

State governments set their own fiscal year. It may or may not align with the federal calendar. For example, in California, the state's fiscal year runs from July 1 to June 30 each year.[39]

The tax year for a business is governed by the fiscal year it chooses. A business may choose any consistent fiscal year that it wants; however, for seasonal businesses such as farming and retail, a good account practice is to end the fiscal year shortly after the highest revenue time of year. Consequently, most large agriculture companies end their fiscal years after the harvest season, and most retailers end their fiscal years shortly after the Christmas shopping season.

The fiscal year for individuals and entities to report and pay income taxes is often known as the taxpayer's tax year or taxable year. Taxpayers in many jurisdictions may choose their tax year.[40] In federal countries (e.g., United States, Canada, Switzerland), state/provincial/cantonal tax years must be the same as the federal year. Nearly all jurisdictions require that the tax year be 12 months or 52/53 weeks.[41] However, short years are permitted as the first year or when changing tax years.[42]

Most countries require all individuals to pay income tax based on the calendar year. Significant exceptions include:

Many jurisdictions require that the tax year conform to the taxpayer's fiscal year for financial reporting. The United States is a notable exception: taxpayers may choose any tax year, but must keep books and records for such year.[41]

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Fiscal year - Wikipedia

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Comoros Fiscal Freedom for Congo Fiscal Freedom for Congo, Republic of Fiscal Freedom for Costa Rica Fiscal Freedom for Croatia Fiscal Freedom for Cuba Fiscal Freedom for Cyprus Fiscal Freedom for Czech Republic Fiscal Freedom for Denmark Fiscal Freedom for Djibouti Fiscal Freedom for Dominica Fiscal Freedom for Dominican Republic Fiscal Freedom for Ecuador Fiscal Freedom for Egypt Fiscal Freedom for El Salvador Fiscal Freedom for Equatorial Guinea Fiscal Freedom for Eritrea Fiscal Freedom for Estonia Fiscal Freedom for Ethiopia Fiscal Freedom for Fiji Fiscal Freedom for Finland Fiscal Freedom for France Fiscal Freedom for Gabon Fiscal Freedom for Gambia Fiscal Freedom for Georgia Fiscal Freedom for Germany Fiscal Freedom for Ghana Fiscal Freedom for Greece Fiscal Freedom for Guatemala Fiscal Freedom for Guinea Fiscal Freedom for Guinea Bissau Fiscal Freedom for Guyana Fiscal Freedom for Haiti Fiscal Freedom for Honduras Fiscal Freedom for Hong Kong Fiscal Freedom for Hungary Fiscal Freedom for Iceland Fiscal Freedom for India Fiscal Freedom for Indonesia Fiscal Freedom for Iran Fiscal Freedom for Ireland Fiscal Freedom for Israel Fiscal Freedom for Italy Fiscal Freedom for Ivory Coast Fiscal Freedom for Jamaica Fiscal Freedom for Japan Fiscal Freedom for Jordan Fiscal Freedom for Kazakhstan Fiscal Freedom for Kenya Fiscal Freedom for Kiribati Fiscal Freedom for Korea Fiscal Freedom for Kosovo Fiscal Freedom for Kuwait Fiscal Freedom for Kyrgyzstan Fiscal Freedom for Laos Fiscal Freedom for Latvia Fiscal Freedom for Lebanon Fiscal Freedom for Lesotho Fiscal Freedom for Liberia Fiscal Freedom for Lithuania Fiscal Freedom for Luxembourg Fiscal Freedom for Macau Fiscal Freedom for Macedonia Fiscal Freedom for Madagascar Fiscal Freedom for Malawi Fiscal Freedom for Malaysia Fiscal Freedom for Maldives Fiscal Freedom for Mali Fiscal Freedom for Malta Fiscal Freedom for Mauritania Fiscal Freedom for Mauritius Fiscal Freedom for Mexico Fiscal Freedom for Micronesia Fiscal Freedom for Moldova Fiscal Freedom for Mongolia Fiscal Freedom for Montenegro Fiscal Freedom for Morocco Fiscal Freedom for Mozambique Fiscal Freedom for Myanmar Fiscal Freedom for Namibia Fiscal Freedom for Nepal Fiscal Freedom for Netherlands Fiscal Freedom for New Zealand Fiscal Freedom for Nicaragua Fiscal Freedom for Niger Fiscal Freedom for Nigeria Fiscal Freedom for North Korea Fiscal Freedom for Norway Fiscal Freedom for Oman Fiscal Freedom for Pakistan Fiscal Freedom for Panama Fiscal Freedom for Papua New Guinea Fiscal Freedom for Paraguay Fiscal Freedom for Peru Fiscal Freedom for Philippines Fiscal Freedom for Poland Fiscal Freedom for Portugal Fiscal Freedom for Qatar Fiscal Freedom for Romania Fiscal Freedom for Russia Fiscal Freedom for Rwanda Fiscal Freedom for Saint Lucia Fiscal Freedom for Saint Vincent and the Grenadines Fiscal Freedom for Samoa Fiscal Freedom for Sao Tome and Principe Fiscal Freedom for Saudi Arabia Fiscal Freedom for Senegal Fiscal Freedom for Serbia Fiscal Freedom for Seychelles Fiscal Freedom for Sierra Leone Fiscal Freedom for Singapore Fiscal Freedom for Slovakia Fiscal Freedom for Slovenia Fiscal Freedom for Solomon Islands Fiscal Freedom for South Africa Fiscal Freedom for Spain Fiscal Freedom for Sri Lanka Fiscal Freedom for Suriname Fiscal Freedom for Swaziland Fiscal Freedom for Sweden Fiscal Freedom for Switzerland Fiscal Freedom for Taiwan Fiscal Freedom for Tajikistan Fiscal Freedom for Tanzania Fiscal Freedom for Thailand Fiscal Freedom for Timor Leste (East Timor) Fiscal Freedom for Togo Fiscal Freedom for Tonga Fiscal Freedom for Trinidad and Tobago Fiscal Freedom for Tunisia Fiscal Freedom for Turkey Fiscal Freedom for Turkmenistan Fiscal Freedom for Uganda Fiscal Freedom for Ukraine Fiscal Freedom for United Arab Emirates Fiscal Freedom for United Kingdom Fiscal Freedom for United States Fiscal Freedom for Uruguay Fiscal Freedom for Uzbekistan Fiscal Freedom for Vanuatu Fiscal Freedom for Venezuela Fiscal Freedom for Vietnam Fiscal Freedom for Zambia Fiscal Freedom for Zimbabwe

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William P. Ruger

William P. Ruger is Vice President of Policy and Research at the Charles Koch Institute and Charles Koch Foundation. Ruger is the author of the biography Milton Friedman and a coauthor of The State of Texas: Government, Politics, and Policy. His work has been published in International Studies Quarterly, State Politics and Policy Quarterly, Armed Forces and Society, and other outlets. Ruger earned an AB from the College of William and Mary and a PhD in politics from Brandeis University. He is a veteran of the war in Afghanistan.

Jason Sorens is Lecturer in the Department of Government at Dartmouth College. His primary research interests include fiscal federalism, public policy in federal systems, secessionism, and ethnic politics. His work has been published in International Studies Quarterly, Comparative Political Studies, Journal of Peace Research, State Politics and Policy Quarterly, and other academic journals, and his book Secessionism: Identity, Interest, and Strategy was published by McGill-Queens University Press in 2012. Sorens received his BA in economics and philosophy, with honors, from Washington and Lee University and his PhD in political science from Yale University.

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Freedom in the 50 States 2015-2016 | Fiscal Freedom | Cato ...

Analysis

Texas is one of the economically freest and personally least free states in the country. Its economic freedom is likely one reason it has been such a job-producing and population-attracting machine. However, its economic policies may get a bit more attention than deserved because of the states size. Yes, the Lone Star State draws a bunch of business from California and other highly regulated locales in an absolute sense and is a jobs juggernaut. But its economic growth rate over the past decade and a half still lags states like the Dakotas, Utah, and Wyoming that have also benefited from the energy revolution.

Texass fiscal policy is very good. It is a fiscally decentralized state, with local taxes at about 4.5 percent of personal income, above the national average, and state taxes at about 3.6 percent of income, well below the national average. However, Texans dont have much choice of local government, with only 0.36 jurisdictions per 100 square miles. State and local debt is above average (with the biggest problem being local debt burdens), at 23.1 percent of income, but it has come down slightly since FY 2011. Government subsidies are below average. Public employment has fallen significantly below average, at 11.8 percent of private employment.

Texass land-use freedom keeps housing prices down. It also has a regulatory taking compensation law, but it only applies to state government. The renewable portfolio standard has not been raised in years. Texas is our top state for labor-market freedom. Workers compensation coverage is optional for employers; most employees are covered, but not all. The state has a right-to-work law, no minimum wage, and a federally consistent anti-discrimination law. Cable and telecommunications have been liberalized. However, health insurance mandates were quite high as of 2010, the last available date. The extent of occupational licensing is high, but the state recently enacted a sunrise review requirement for new licensure proposals. Time will tell whether it is at all effective. Nurse practitioners enjoy no freedom of independent practice at all. Texas has few cronyist entry and price regulations, but it does have a price-gouging law, and Teslas direct sales model is still illegal. The civil liability system used to be terrible, but now it is merely below average. The state abolished joint and several liability in 2003, but it could do more to cap punitive damages and end parties role in judicial elections.

Personal freedom is relatively low in Texas, but it should rise with the Obergefell decision, setting aside Texass super-DOMA (see Appendix Table B17). Criminal justice policies are generally aggressivethough Texas has emerged as a leading voice in the national reform movement. Even controlling for crime rates, the incarceration rate is far above the national average and has not improved since 2000. Drug arrest rates have fallen over time but are still above average for the user base. Nondrug victimless crime arrest rates have also fallen over time and are now below the national average. Asset forfeiture is mostly unreformed, and law enforcement frequently participates in equitable sharing. Cannabis laws are harsh. A single offense not involving minors can carry a life sentence. Even cultivating a tiny amount carries a mandatory minimum of six months. In 201314, the state banned the mostly harmless psychedelic Salvia divinorum. Travel freedom is low. The state takes a fingerprint for drivers licenses and does not regulate automated license plate readers at all. It has little legal gambling. Private school choice programs are nonexistent, but at least private schools and homeschools are basically unregulated. Tobacco freedom is moderate, as smoking bans have not gone as far as in other states. Gun rights are moderately above average and should improve a bit in the next edition with the new open-carry law. Alcohol freedom is above average, with taxes low. Texas has virtually no campaign finance regulations.

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Freedom in the 50 States 2015-2016 | Texas Fiscal Freedom ...

For well over a hundred years, the economic world has been engaged in a great intellectual debate. On one side of this debate have been those philosophers and economists who advocate an economic system based on private property and free marketsor what one might call economic freedom. The key ingredients of economic freedom are personal choice, voluntary exchange, freedom to compete in markets, and protection of person and property. Institutions and policies are consistent with economic freedom when they allow voluntary exchange and protect individuals and their property.

Governments can promote economic freedom by providing a legal structure and a law-enforcement system that protect the property rights of owners and enforce contracts in an evenhanded manner. However, economic freedom also requires governments to refrain from taking peoples property and from interfering with personal choice, voluntary exchange, and the freedom to enter and compete in labor and product markets. When governments substitute taxes, government expenditures, and regulations for personal choice, voluntary exchange, and market coordination, they reduce economic freedom. Restrictions that limit entry into occupations and business activities also reduce economic freedom.

Adam Smith was one of the first economists to argue for a version of economic freedom, and he was followed by a distinguished line of thinkers that includes John Stuart Mill, Ludwig von Mises, Friedrich A. Hayek, and Milton Friedman, as well as economists such as Murray Rothbard.

On the other side of this debate are people hostile to economic freedom who instead argue for an economic system characterized by centralized economic planning and state control of the means of production. Advocates of an expanded role for the state include Jean-Jacques Rousseau and Karl Marx and such twentieth-century advocates as Abba Lerner, John Kenneth Galbraith, Michael Harrington, and Robert Heilbroner. These scholars argue that free markets lead to monopolies, chronic economic crises, income inequality, and increasing degradation of the poor, and that centralized political control of peoples economic lives avoids these problems of the marketplace. They deem economic life simply too important to be left up to the decentralized decisions of individuals.

In the early twentieth century, state control grew as communism and fascism spread. In the United States, the New Deal significantly expanded the role of the state in peoples economic lives. In the late 1970s and early 1980s, economic freedom staged a comeback, with deregulation, privatization, and tax cuts. Of course, the major increase in economic freedom came with the fall of the Soviet Union. Today, the advocates of freedom dominate the debate. In fact, one major socialist, the late Robert Heilbroner, believed that the advocates of freedom have won (see socialism).

Substantial evidence has informed the debate. Indeed, the stark differences in the standards of living of people in economically freer systems compared with those in less-free systems have become more and more obvious: North versus South Korea, East versus West Germany, Estonia versus Finland, and Cubans living in Miami versus Cubans living in Cuba are examples. In each case, people in the freer economy have better lives, in virtually every way, than their counterparts in the less-free economies.

The above comparisons are suggestive. But is it possible to find a relationship between economic freedom and prosperity over a wider range of nations? In the 1980s, scholars began to measure and rate economies based on their degree of economic freedom. Organizations such as Freedom House, the Heritage Foundation, and the Fraser Institute, as well as individual scholars, published economic freedom indexes attempting to quantify economic freedom. They came up with an ambitious, and necessarily blunt, measure.

In 1996, the Fraser Institute, along with a network of other think tanks, began publishing the Economic Freedom of the World (EFW) annual reports, which present an economic freedom index for more than 120 nations. Using data from the World Bank, International Monetary Fund, Global Competitiveness Report, International Country Risk Guide, PricewaterhouseCoopers, and others, the report rates countries on a zero-to-ten scale. Higher scores indicate greater economic freedom. The overall index is based on ratings in five broad areas. Counting the various subcomponents, the EFW index uses thirty-eight distinct pieces of data. Each subcomponent is placed on a scale from zero to ten that reflects the range of the underlying data. The component ratings within each area are averaged to derive ratings for each of the five areas. In turn, the summary rating is the average of the five area ratings. The five major areas are:

Size of government. To get high ratings in this area, governments must tax and spend modestly, and marginal tax rates must be relatively low. While governments are important in protecting property rights, enforcing contracts, and providing some services, as governments grow they inevitably infringe on peoples economic freedom to engage in trade and enjoy the fruits of their labor.

Sound money. It might not be clear at first why this is a measure of freedom rather than just a measure of good economic policy. But money would likely be sound if the government did not have a legal monopoly over the money supply (see competing money supplies and gold standard). Therefore sound money is a measure of how much the government refrains from abusing its monopoly power. To get high ratings here, a countrys inflation must be low and stable, and the government must permit people to own currencies of other nations.

Property rights and rule of law. This area measures the consistency of a countrys legal system with the protection of property, enforcement of contracts, and evenhanded application of the law. This is perhaps the most important area of economic freedom, as economic freedom requires that people be secure in their persons and physical property; it also requires a judicial system that enforces contractual agreements fairly.

International trade. Countries that refrain from enacting protectionist tariffs, quotas, and capital controls get higher ratings in this area (see international trade). Economic freedom means that people can engage in trade with any person of their choosing. If the government taxes or otherwise prevents people from buying or selling with people in other countries, it reduces their freedom.

Regulation. Regulations such as interest-rate controls (usury laws), restrictions on bank ownership by foreigners, minimum wages, military conscription, business licensing, and price controls are included. Such controls and regulations violate the principles of economic freedom. To get high ratings, countries must refrain from such regulations, leaving people free to set prices, open businesses, and trade.

Any attempt to measure freedom on this basis inevitably omits the details. Because all these factors are weighted equally, two countries could have identical indexes in different ways: one might have high taxes but a good rule of law, while another may have low taxes but a poor legal system. An economic freedom index allows us to make broad comparisons among countries, but the index is a blunt measure.

What is the freest economy in the world? Hong Kong. Hong Kong has relatively low taxes, a good legal system, sound money, free trade, and minimal regulations; and it has had these institutions and policies in place for several decades. Other highly rated countries include Singapore, the United States, New Zealand, and the United Kingdom. Table 1 shows the economic freedom ratings of selected countries for 1980, 1990, and 2002.

Singapore is an interesting case because it exhibits an odd combination of high economic freedom and considerable political and civil repression. Although economic freedom and political freedom tend to go together, especially in the long run, Singapore is an exception. It will be worth watching to see if Singapore can maintain this situation. Many scholars believe that economic freedom and political repression are an unsustainable combination.

Some countries, such as Hong Kong, Singapore, and the United States, consistently registered high ratings throughout the 1980s and 1990s. Germanys economic freedom rating has also been quite steady. Germanys rating in 2002 was 7.3, compared with 7.0 in 1980. Because several other countries have made substantial improvements, however, Germanys ranking has declined, receding to twenty-second in 2002 from fifth in 1980. Likewise, because other countries have improved, Frances ranking fell to forty-fourth from twenty-eighth in 1980.

Looking at some absolute scores, one can note a clear trend worldwide toward economic liberalization since 1980. The highest-rated African nation, Botswana, increased its rating from 5.0 in 1980 to 7.4 in 2002 and now ranks eighteenth in the world. Also in Africa, Mauritiuss rating jumped from 4.7 in 1980 to 6.1 in 1990 and 7.2 in 2002. In Latin America, Chiles rating improved from 5.3 in 1980 to 7.3 in 2002, making it the highest-rated country in its region.

Among developed countries we also have seen some big reformers. Irelands rating jumped from 6.2 in 1980 to 7.8 in 2002. The United Kingdom was a big gainer during the Thatcher years, when its rating rose from 6.1 in 1980 to 7.7 in 1990 and, ultimately, to 8.2. Similarly, New Zealands economic reforms in the late 1980s and early 1990s caused its rating to increase from 6.1 in 1980 to 8.2 in 2002. While these gains are not the largest seen in the world, they do show that well-established developed economies can implement significant economic liberalization.

The worlds two largest economies by population, India and China, both have low ratings. But both have made tremendous strides toward more economic freedom. Chinas rating increased from 3.8 to 5.7, and Indias rose from 4.9 to 6.3. While their current ratings are still low by world standards, these improvements in economic freedom have been quite substantial; both countries economies are growing rapidly as a result.

Among the former Soviet and centrally planned economies, some have succeeded greatly in increasing economic freedom. Estonia now ranks thirteenth in the world, having instituted nearly complete free trade, a stable monetary policy, and considerable fiscal restraint. In 1995, it was ranked eighty-first. Meanwhile, some of these nations have shown little progress; Russia and Romania, for instance, rank near the bottom of the list and show few signs of improvement. In these countries, the near inability of the legal system to protect property and fairly enforce contractsand the corruption this inevitably ensuresis a particularly big problem from the standpoint of both economic freedom and economic growth.

Only a few countries have moved away from economic freedom in the last twenty years. Zimbabwe has recently taken a turn for the worse as the government continues to attack property rights and impose tight controls on economic activity. Venezuela has steadily declined in its rating (and ranking). In the early 1970s, Venezuela ranked in the top twenty, but by 2002 it had fallen to the very bottom.

An economic freedom index allows researchers to examine the empirical relationships between economic freedom and other desirable social outcomes. The big question is: Do countries that exhibit greater degrees of economic freedom perform better than those that do not?

Much scholarly research has been and continues to be done to see if the index correlates with various measures of the good society: higher incomes, economic growth, income equality, gender equality, life expectancy, and so on. While there is scholarly debate about the exact nature of these relationships, the results are uniform: measures of economic freedom relate positively with these factors.

The figures that follow illustrate the simple relationship between the economic freedom index and various measures of economic and social progress. These figures indicate the relationships that more scholarly studies have found, but they are not conclusive evidence. Economic growth, for example, appears to be related to both the level of economic freedom and changes in the level of economic freedom as well as to investment in physical and human capital. The simple graphs on the next page are no substitute for more scholarly work. Nevertheless, these simple relationships are a starting point for examining the links between economic freedom and economic results.

Figure 1 shows the economic freedom ratings related to GDP per capita. The chart organizes the world into five quintiles ordered from the countries with the least economic freedom to the countries with the most. As economic freedom increases, so does average income.

The level of economic development at any point in time is, of course, the result of the accumulation of capital and technology over a long period. Figure 2 illustrates the correlation between economic growth (rates of change in GDP per capita) between 1980 and 2002 and the average level of the economic freedom index since 1980. Figure 3 illustrates the large improvements in life span associated with greater economic freedom.

Figure 1Economic Freedom and GDP per Capita

Figure 2Economic Freedom and Economic Growth

Figure 3Economic Freedom and Life Expectancy

Figure 4Economic Freedom and the Income Level of the Poor

While there is no clear evidence that economic freedom creates greater income inequality, there is clear evidence that lowest-income people in freer countries are better off than their counterparts in less free countries. Figure 4 shows the average income level of the poorest tenth of the population by economic freedom quintile. Clearly, as Adam Smith recognized more than 230 years ago, economic freedom and the economic prosperity it brings work to the advantage of the poor.

As time goes on, these measures of economic freedom will improve and our understanding of the relationship between private property and free markets and economic performance will similarly improve. But in the great debate between economic freedom and political planning, the evidence is increasingly clear. Economic freedom leads to better economic results.

Robert A. Lawson is the George H. Moor Chair and Professor of Economics at Capital University in Columbus, Ohio. He is a coauthor of the Economic Freedom of the World annual reports.

Friedman, Milton. Capitalism and Freedom. Chicago: University of Chicago Press, 1962.

Messick, Richard E., ed. World Survey of Economic Freedom 19951996: A Freedom House Study. New Brunswick, N.J.: Transaction Publishers, 1996.

Scully, G. W., and D. Slottje. Ranking Economic Liberty Across Countries. Public Choice 69, no. 2 (1991): 121152.

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