EoW September 2013

Transatlantic cable

less use for tax deductions for domestic production. But where the Alcoa position stands out more strikingly is in contrast to that of the American Iron and Steel Institute (AISI). In an 15 th April letter to the House Ways and Means Committee’s tax reform working groups, Thomas J Gibson, the association’s president and CEO, strongly urged against proposals for a reduction in the statutory corporate tax rate, to be paid for by eliminating all or most corporate deductions and credits. Some analyses reportedly have suggested that eliminating deductions to pay for rate reductions would amount to a $48 billion tax increase for manufacturers, while granting tax cuts to retail and nancial services industries. Wrote AISI’s Mr Gibson, to the lawmakers, “This is concerning to the steel industry, and should be to the manufacturing sector as a whole.” (“Steel Fights Aluminum for Breaks in Congress,” 21 st June).

which industry – steel or aluminium – carries more weight in today’s Washington. As reported by Bloomberg News , the nation’s biggest aluminium maker, Alcoa Inc (Pittsburgh), has broken with its steel industry counterparts to lobby Congress for the elimination of corporate tax deductions in exchange for a cut in the tax rate to 25 per cent from 35 per cent. Alcoa is a member of a coalition of companies, the Alliance for Competitive Taxation (ACT), that considers a lower statutory corporate rate more bene cial to business than numerous tax deductions. Bloomberg’s Marc Heller wrote: “That turns on its head the conventional wisdom that manufacturers will ght to preserve corporate tax breaks.” The other members of ACT are, for the most part, in service industries (eg banking) and less capital-intensive industries (such as technology), which lobbyists and tax analysts say have

† While diverging views among industries are not unusual, said Eric Toder, an analyst at the non-partisan Tax Policy Center, he told Bloomberg‘s Mr Heller that he found Alcoa’s position surprising. Typically, Mr Toder said, manufacturers want compensation through the tax code for depreciation. Another consideration was noted by a lobbyist with ties to manufacturing, who said that companies with a big international presence, such as Alcoa, are less concerned with deductions than with trends: for instance, whether or not the US moves to a territorial tax system, which would tax US multinational corporations only on what they earn at home, not on pro ts repatriated from overseas. A territorial system would be much more valuable to those companies than corporate tax deductions, the lobbyist said. A Cuban version of the Internet café raises hopes of better and wider online access in the largest island in the Caribbean TelecomTVOne , a TV channel for the global ICT sector, has reported that the state telecom of Cuba, Etesca, is establishing 118 cyber salons that will make available to the 12 million-strong Cuban public “a censored version of a sub-set of part” of the Internet. The service will be costly, with the $4.50 price of an hour’s access nearly a quarter of the $20 average monthly income in Cuba. Taking note of the island nation’s “painfully long, slow, incremental emergence from the electronic dark ages,” TelecomTVOne’s Martyn Warwick Telecom

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September 2013