The cost of a Covid-19 vaccine

Last week, India “strictly advised” its vaccine makers to get a Covid-19 vaccine ready in just six weeks (with “non-compliance” to be “viewed very seriously”). While that deadline may be unrealistic (it’s meant to coincide with India’s Independence Day, on 15 August), could the costs be too?   What should be the cost of a vaccine that will not just protect people from a disease, but possibly restore societies and economies?   Since there is no officially-approved vaccine yet, one surrogate could be the price of Gilead’s Remdesivir, the closest medicine the world has to treat the coronavirus.   Its pricing in the US varies from US$390-520 per vial, or US$2,340-3,120 per treatment course, depending on whether the patients being treated have private insurance, government-sponsored insurance, or come from countries with national health care systems.   In India, the generic version of Remdesivir will cost Rs 4,800 (US$64).   But what about the actual vaccines? Doctor, author and former New York Times journalist Elisabeth Rosenthal tried to ask and answer this question.
If a Covid-19 vaccine yields a price of, say, $500 a course, vaccinating the entire population would bring a company over $150 billion, almost all of it profit.
Kevin Schulman, a physician-economist at the Stanford Graduate School of Business, called that amount “staggering.” But Katherine Baicker, dean of the University of Chicago Harris School of Public Policy, said that from society’s perspective “$150 billion might not be an unreasonable sum” to pay to tame an epidemic that has left millions unemployed and cost the economy trillions. How a Covid-19 Vaccine Could Cost Americans Dearly, New York Times
US$500 per person for a vaccine might not sound like a lot for saving the world, but what if you have to take it each year? Dr Rosenthal makes the point that many drug companies are offering “not for profit” pricing for Covid-19 vaccines for “emergency pandemic use”. 
Meaning, the prices may be different when there is no pandemic and it’s only a routine annual vaccination.
It pays … dividends
 
Savio
 
While India Inc’s fourth-quarter results may not be anything to write home about, investors who held on to their shares have enjoyed a bonanza in the form of dividends. As is traditional, the defensive sectors, such as consumer and software services, led the charge.  
The combined dividend payout by India’s top listed companies, which are part of the BSE500 Index, for FY20 was up 6.5 per cent, the fastest growth in the past three years. And, equity investors should thank cash-rich biggies such as Tata Consultancy Services (TCS), ITC, Hindustan Unilever, Nestlé, and Bajaj Auto for this.
 
[…]
 
This is the first dividend season since shareholders have been mandated to pay tax on their dividend income against the earlier rule of companies paying 20.56 per cent dividend distribution tax (DDT) on their payout.
 
Experts attribute the higher payout to the change in dividend law and cut in corporate income tax. “Now that dividend is taxed in the hands of shareholders, many companies pass on the savings on DDT to shareholders in the form of higher dividends per share,” said U R Bhat, director Dalton Capital Advisors. Despite poor show in Q4, India Inc’s combined dividend payout rises 6.5%, Business Standard
Source: Business Standard
However, the change in the dividend law earlier this year means that companies have to deduct the tax at source before distributing. That’s easy peasy when it comes to retail and domestic investors. But it has been a nightmare when it comes to cutting taxes on the dividend due to overseas funds before the payout. That is because the tax rate depends on where the fund is based, the dividend earned, and if the fund is structured as a trust. Companies have just not made such distinctions, which has also left custodians who handle the back-end work of foreign investors in a bind.
Most companies have applied a uniform rate to cut taxes on dividends and passed them on to the custodians as lumpsum. Now, custodians, which are clueless on how much companies have deducted for each investor, are unable to pass on the dividends to the foreign clients. Domestic mutual funds too find themselves in a sticky situation as some of the companies went ahead and deducted taxes though the law exempts them from paying any tax on dividends. Companies, custodians struggle with dividend payments, The Economic Times
The great dividend festival could also be coming to an end for retail investors. As the Business Standard article goes on to say:
The changes in dividend tax law also saw many companies advancing dividend payout for FY20 to February and March to avoid higher taxes that came into effect from April 1. All this could translate into significantly lower dividend income for shareholders in FY21.
Your friendly neighbourhood tax avoider   Arundhati   18% tax on a haircut! Every time you get the bill, that number hurts.    But what if there was simply no bill? With a gentleman’s agreement, you agree to not insist on a bill and the 18% Good and Services Tax (GST) disappears.    A reader wrote to us about how tax avoidance among neighbourhood services like yoga/gym trainers and beauticians is becoming a common practice. And how they are reluctant to give the sales invoice that carries a GST of 18%.    At the surface, the simple second-order effect here is that higher the tax, greater the avoidance. After all, the taxes on services have gone up since the time Prime Minister Narendra Modi came to power. What was 12.36% in 2014 is now 18% under GST. (It should, however, be said the taxes on buying goods have gone down.)    But, actually, there is no reason for these service providers to avoid GST. Many of them would not even be GST-registered businesses as they may not meet the threshold of Rs 20 lakh annual turnover, above which businesses need to pay  GST.    The real reason why these solopreneurs and small businesses don’t issue an invoice is more for income tax avoidance.    At a broad level, the government collects more money via indirect taxes (GST) than direct taxes (income tax)—Rs 12.2 trillion vs Rs 10.5 trillion (numbers for the financial year that ended in March 2020). But at an individual level (which includes these solopreneurs), one would pay more income tax than GST, reckons a Nagpur-based small business owner The Ken spoke to.    And sales invoices are direct proof of income, making it a rather inconvenient piece of evidence.    In fact, when GST was rolled out in 2017 after years of stalling, the idea was that more people will end up paying income tax as a result of it. This is from a 2018 Economic Times article:
When the tax base of GST increases, more taxpayers are also added within the ambit of direct taxes. Before GST implementation, taxpayers used to report different turnover for the purpose of sales tax and income tax so as to avoid the tax liability under the Income Tax Act.
 
According to the Economic Survey 2017-18, the base of indirect taxpayer has increased substantially by more than 50% after the implementation of GST, thus, it can be said that GST has transformed the business environment in India in a singular manner.
 
Though GST is an indirect tax, yet it has significantly impacted the contribution of direct taxes too in the overall tax revenue of the government. As per the CBDT statement dated April 2, 2018, the provisional direct tax collections for the financial year 2017-18 is Rs. 9.95 lakh crore which is 17.1 percent higher than the net collections for FY 2016-17. Higher direct tax collections: GST impact? The Economic Times
The number of income tax returns filed has gone up nearly 50% from 2014 to now. While the expectation was that income tax payers will rise significantly over the years, still only 15 million pay income tax out of a 1.3 billion population.
Quitting China for Southeast Asia
Jum
 
Southeast Asian countries are in a war… for foreign investments leaving China.
 
From Indonesia to Myanmar, countries have stepped up efforts to attract foreign manufacturers fleeing China. The country saw major supply chain disruptions due to the pandemic, exacerbating rising tariff costs from a trade fight with the US.
 
Here’s what each country is doing:
  Indonesia is setting up industrial parks and offering land for cheap. It’s also cutting the corporate income tax (CIT) rate to 22% from 25% this year, then to 20% by 2022; Thailand has dangled incentives, including a 50% tax cut, for firms relocating production from China; Malaysia has offered a 15-year tax exemption for manufacturers; The Philippines is pushing for a bill that will bring its CIT from 30%—the highest in Southeast Asia—to 25% this year, then to 20% by 2027.  
Among these countries, Vietnam is said to have the biggest edge with its low-cost labour, free-trade agreements globally, and its close proximity to China.
 
In fact, a steady stream of manufacturing businesses have already moved operations to Vietnam, like US-based Dell, South Korea’s Samsung and Japan’s Nintendo.
 
Since last year, Vietnam’s exports to the US have been growing, making the latter the top importer of Vietnamese goods. 
 
However, Vietnam has run into labour shortages, given that its population is less than one-tenth of China’s. This is where neighbouring Southeast Asian markets see an opening. No matter how competitive the battle becomes, ultimately the region wins.
59 degrees of communication gaps
Savio
 
India’s sudden decision to ban 59 Chinese apps overnight was heralded as an opportunity for domestic players to fill that space. Now, keep in mind that China itself has a ban on the more popular apps and websites like WhatsApp and Google.
 
So what happens to trade when each party has access to one set of apps that is banned in the other party’s country?
Traders use WeChat, Mi Video and QQ Mail, which figure in India’s negative list, to do business with China. Translated texts, pictures and videos shared through these apps helped traders from both the countries share documents, send pictures of consignments and overcome language barriers.
 
“The sudden ban on the mobile apps is going to impact the cotton and cotton yarn export business in the short term. WeChat and QQ have become the lifeline for both Indian and Chinese businessmen to connect,” said Vivek Kaushal, senior general manager (marketing and purchase), DCM Nouvelle Limited. “No one has the time to write a mail in English, so the entire business transaction from taking orders, transferring letters of credit to even addressing complaints was on the mobile app.”
He said the app also translated English text messages in Chinese and vice versa. Chinese app ban may hinder business communication, The Economic Times
Singapore students: to go or not to go   Ben   Singaporean students with spots in overseas universities are facing a conundrum in this pandemic: should they defer their studies or cancel them altogether? Seeing the opportunity, universities in the city-state opened up an additional 2,000 slots for enrolment this year, with the hope of attracting those marooned students.    Some of those new slots are specifically for Singaporeans, who were forced to put their overseas study plans on hold, or who had planned to join the workforce but decided to study instead. Those whose overseas studies were disrupted halfway could also write in to transfer to a local university.   Choosing to stay local, however, brings some opportunity costs. Other countries may provide better opportunities in terms of internships and jobs down the line, especially in specialist fields like computer science. Then, there is the question of standards given the expanded local student count, although Singapore’s Ministry of Education has assured that education quality will be maintained.   But some students have preferred to wait the pandemic out and still pursue their plans to study abroad. “I am hoping that things will turn around by September and I can head back (to the US) to continue with my studies,” one student told The Straits Times.   There are some 23,715 Singaporeans studying overseas, according to data from UNESCO. Popular study destinations include the US, UK and Australia.
US woes for international students   Jon   First, colleges are adopting online learning courses that, while ideal for pandemic times, still come with eye-watering prices. Harvard, for example, is going fully digital for its next academic year, but undergraduate tuition remains priced at US$49,653.   That’s coupled with news that international students enrolled at US colleges and schools that run courses online will not be eligible for visas to remain in the country, as Al Jazeera notes.
The “Department of State will not issue visas to students enrolled in schools and/or programs that are fully online for the fall semester nor will U.S. Customs and Border Protection permit these students to enter the United States”, ICE’s highly anticipated new rules said.   Students already in the US whose programmes have switched to online-only instruction must “depart the country or take other measures, such as transferring to a school with in-person instruction to remain in lawful status”, the rules continued.   “If not, they may face immigration consequences including, but not limited to, the initiation of removal proceedings.” US says international students must leave if classes are online, Al Jazeera
A number of high-profile figures, including the Taiwan-born creator of the N95 mask that protects against Covid-19 infection, initially came to the US as international students before settling down and becoming naturalised citizens. There’s widespread concern that these two decisions, made together, will limit the arrival of talent from overseas and impact the US’ growth potential.

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