Message from ANDEV Co-Chair Imants Kins

Dear ANDEV supporters,
I was recently in New York on business. New York State  is moving to create a series of Special Economic Zones throughput NY.  Many of these would be in Upstate NY which in a geographically context is like SEZ’s in the North of Australia. See the article below from the UK Financial Times.
While in NYC I was invited to attend a closed interview at SUNY held by the European USA Chamber  of Commerce with the EU trade Commissioner on Free Trade between EU and USA. What is driving the EU is its poor demographics so they need access to the USA market where the demographics are so much more positive with increasing population and a relatively younger population.
What was important and related to Australia was how Australia is being left behind in bilateral free trade agreements. The Federal Government has given up on being able to negotiate a Free trade agreement with China  and struggling with FTA with Japan. So with  FTA’s  with our two largest trade partners we have failed. If the EU and USA reach agreement the world’s two largest trading countries will see increased trade at the expense of countries like Australia. This makes an SEZ in the North of Australia all so very  much more important if Australia is to be able to create jobs for future generations.
Article from UK Financial Times

Andrew Cuomo proposes tax-free zones to lift New York economy

By Shannon Bond in New York
While Apple, Starbucks and other big companies are drawing scrutiny for their low tax rates, New York’s governor wants to woo businesses with a promise of no taxes for 10 years.
Andrew Cuomo has proposed tax-free zones centred around the state’s public universities to attract jobs. New and existing businesses that open near campuses would pay no corporate, property or sales taxes, and their owners and employees would be exempt from income taxes.
“By tax-free, I mean really, really tax-free,” Mr Cuomo said last week as he toured the state to promote the plan.
The plan comprises 120m square feet of space on and around dozens of State University of New York campuses and a number of private colleges, all outside Manhattan.
It is Mr Cuomo’s latest attempt to jump-start the sluggish upstate economy by encouraging growth in the tech sector and changing New York’s reputation as a high-tax environment.
Critics, however, say the programme risks favouring some businesses at the expense of others and would undermine an already weakened tax base in upstate New York – a broad swath that excludes the New York City metropolitan area.
Cities in the state’s north and west that were once manufacturing and transportation hubs have seen businesses shutter and workers leave as the region failed to adapt to a post-industrial economy. Buffalo, for example, has lost more than half its population since its peak in 1950, when it was the nation’s leading industrial centre, largest inland port and 15th largest city.
In the past decade, upstate job growth has run at 5 per cent, lagging New York City’s 16 per cent, the state’s 11 per cent and a national rate of 9 per cent, according to Economic Modeling Specialists, a labour-market data provider.
The plan will “help end the brain drain that’s plagued our communities for years”, said Brian Sampson, executive director of Unshackle Upstate, a business advocacy group.
New York has worked to develop a technology industry centred around its universities, including creating a $50m venture capital fund to invest in new companies. The tax-free initiative would help keep those businesses in the state, Mr Cuomo said, adding that as many as three-quarters of tech start-ups leave within a year.
“If you just reduced the loss of jobs, that would be a home run. We create start-up businesses. Right now we just can’t keep them,” Mr Cuomo told the Financial Times. “They get their legs under them, so to speak, then they leave for a lower-tax environment.”
New York faces competition from states such as Texas and Florida that do not have personal income taxes and where corporate levies are lower, a factor business leaders say hampers the further development of a local tech economy.
“Look at the trajectory of growth in the tech sector in Austin [Texas] compared to New York,” Kathryn Wylde, president of the Partnership for New York City, a business lobbying group, said recently. “Austin’s competitive pricing, quality of life and affordable housing allow them to attract a lot of companies that we would like to see growing in Brooklyn.”
Although Mr Cuomo’s planned zones include five locations on Long Island and four in New York City’s outer boroughs, their focus is the upstate economy. This will probably mean an uphill battle for passage in the state legislature, which is dominated by representatives from New York City and its suburbs.
While legislators have yet to weigh in on the proposal, it has drawn scepticism from observers on both the right and left. E.J. McMahon of the fiscally conservative Empire Center for New York State Policy said in a recent blog post that “the initiative is highly unlikely to generate growth on a game-changing scale”.
“If our taxes are such a hindrance to growth, why not reduce them for everyone?” he wrote. “A more daring approach, for example, would be to simply phase out the state corporate franchise tax entirely throughout the 50-county upstate region, for all businesses operating there, whether new or existing.”
Ron Deutsch of New Yorkers for Fiscal Fairness, a union-backed progressive group, warned that Mr Cuomo’s plan was too similar to the state’s now-defunct “empire zones”, which offered incentives to businesses who moved into low-income neighbourhoods. That programme became associated with fraud and abuse by companies who got tax breaks but created few jobs.
Mr Cuomo said that the tax-free plan is different from the “complicated scheme” of empire zones, which had contained “a lot of fraud”.
Mr Deutsch also questioned how the communities around tax-free zones would pay for services without tax revenue. “It doesn’t mean that these businesses don’t need municipal services – fire, police, sanitation, sewers, roads and bridges, schools. Somebody’s going to pick up the tab.”
But Mr Cuomo said the increase in population from a revived economy would spur spending and bring in other revenue.
“There would be more economic activity in the area that would only help,” he said. “Even if a person is not paying income tax to the state, they are still going to the grocery store and buying food, they bought a house that gave a real estate agent a commission, they’re buying a car from a local dealer.”

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