Thursday, Mar. 16
INCOMING: INDIA’S SALES TAX
India is closing in on its most significant tax reform since independence: a unified national sales tax. Prime Minister Modi’s government has made the introduction of the GST a key economic reform policy; it’s adamant that the landmark scheme be implemented by July 1. To make this happen, a council will meet on Thursday to finalise two pieces of enabling legislation which are to be presented to parliament in the coming weeks.
A GST would do away with India’s complex web of federal and state taxes, replacing them with a single, simplified levy. This is expected to make it easier for businesses to operate across the country’s 36 regions (a notoriously bureaucratic task) and transform Asia’s third largest economy into a single market for the first time.
To enact the historic reform, the federal government must work in tandem with India’s powerful regional authorities, which will be central to the tax’s collection. With 29 states and seven territories, this is no mean feat.
Much work is yet to be done – including circumventing an obstructive upper house. A positive outcome from Thursday’s council meeting is key if the Modi government is to stick to its July 1 target.
BOWLING AND PIZZA: TRUMP’S BUDGET PLANS
Donald Trump’s budget director offered up a tasty treat to conservative lawmakers on Tuesday night: bowling and pizza at the White House. The move was designed to grease Congressional wheels ahead of the administration’s fiscal plans, which will be unveiled on Thursday. But Mr Trump will need to offer far more than ten pins and a slice to get his ambitious budget passed.
Except for a $54 billion boost to the armed forces, the new administration has remained tight-lipped on its spending (and saving) plans. However, pundits agree that large cuts to the budgets of the Environmental Protection Agency and State Department are to be expected on Thursday.
Like many of those who held the office before him, President Trump will have a hard time getting his fiscal measures passed. It is the legislature, not the White House, that has final say over public spending and, with some Republicans already coming out against what they anticipate the administration will announce, prospects look bleak.
Among the dissenting voices is Senator Lindsey Graham, who opposes the reported 30% cut to the State Department and labels the budget “dead on arrival”. With a mere four-seat Senate majority, Graham’s objection could make things difficult for the Republican President.
STRAIT INTO CRISIS? TAIWAN’S DEFENCE REVIEW
Unsurprisingly, the focus will be on China when Taiwan’s Defence Minister Feng Shih-kuan presents a Quadrennial Defence Review to parliament on Thursday.
Relations between Beijing and Taipei have deteriorated since President Tsai Ing-wen took office last May. Her ruling Democratic Progressive Party has long advocated for full independence from the mainland; the president herself has refused to sign-off on the 1992 consensus, which stipulates that there is only one China but is silent on which China that is.
Tensions escalated further after Donald Trump accepted a congratulatory phone call from Ms Tsai in December. In response, Beijing used its diplomatic might to pressure the 21 states that recognise Taiwan to cut ties.
Similarly, the People’s Republic has flexed its military muscles, increasing the number of maritime patrols around the island and in the disputed South China Sea.
Taiwanese authorities view this increasing military presence as a fundamental threat to national security. To counter this, Thursday’s defence review is expected to call for more robust ties with the US and Japan and propose developing stronger military capabilities.
While the presentation aims to highlight Taiwan’s military options, the island has no real alternative to improving relations with its powerful neighbour.
HAPPENING ELSEWHERE…
Donald Trump’s much-debated travel ban on citizens from Somalia, Iran, Syria, Sudan, Libya and Yemen (Iraq has been dropped from the list) will come into force. Federal courts across the country plan to scrutinise the presidential order, opening the door for it to be struck down again. Update: a federal court in Hawaii has blocked the executive order, temporarily freezing the travel ban.
A number of central banks will meet, including the Bank of England, Bank of Japan and Central Bank of Turkey. All are expected to keep rates on hold, although a seven-year high in unemployment (now at 12.7%) and a depressed currency suggest that Turkish central bankers should probably opt for a hike.