Good afternoon. Welcome to this UNU wider research webinar, part of our new series on how COVID-19 is changing development. My name is Rachel Gisselquist. I'm a senior research fellow here at UNU wider and I'm very pleased to be chairing the session this afternoon. I think that some of you in the audience are new to UNU wider. We are the United Nations University World Institute for Development Economics Research and we began operations here in Helsinki about 35 years ago as the first research center of the United Nations University which is the academic arm of the UN system. We work on issues of international development, on issues affecting the living conditions of the world's poorest people. Today in our webinar we'll be talking about issues of taxation and COVID-19 with particular focus on Sub-Saharan Africa. In recent years I think it's fair to say there's been a hopeful tone in discussions about public revenue in Sub-Saharan Africa. Aid has moved a bit out of the spotlight and a major question, one which a number of our colleagues and collaborators here at UNU wider have been working on, is how African governments themselves might finance the achievement of the sustainable development goals. So now with the COVID-19 pandemic the situation is in flux. How will the economic costs of the pandemic be born? What will the role be for domestic revenue mobilization in Sub-Saharan Africa? And how might tax administrations respond? I'm very, very pleased today to welcome our speaker, Professor Mick Moore, who will be speaking to these topics. The title of his presentation is Tax After the Pandemic. Can Africa Raise the Revenue It Needs? He is a professorial fellow at the Institute of Development Studies at the University of Sussex and the founding CEO and a senior fellow with the International Center for Tax and Development. He's a political economist with broad interests and a long list of publications on issues of governance and public administration in low-income countries and specific interests in taxation and development. And he has extensive field research experience, especially in Sri Lanka, Taiwan, and India. And he's done advisory work in many countries in Africa and in Asia. I'm also very pleased to welcome a second speaker today, Mili Isingoma Nalukwago, who will be serving as our discussant this afternoon. She is the Assistant Commissioner for Research, Planning, and Development at the Uganda Revenue Authority. And she has 25 years of experience in tax administration in Uganda. Among her number of roles and responsibilities and activities, I should also, I wanted to mention that she is collaborating with you and you wider in connection with our work on tax administrative data and the South Mod Project, which is a joint project between you and you wider, the European Union Tax Benefit Microsimulation Model, UROMOD at the University of Essex, and the Southern African Social Policy Research Insight SASFRI, in which tax benefit microsimulation models for selected countries, selected developing countries are being built. She will be sharing insights on the preparations that the Uganda Revenue Authority is making to address the issue of taxation after the COVID-19 pandemic. So in a moment, I'll turn the microphone over to our speakers, but first just a brief note before we start on how the seminar will work today. As you might have noticed, your microphones have been muted, but I would encourage you to think of questions that you can pose to our speakers, and I would encourage you during the presentations, if you would like, to send questions through the Q&A function. And after the presentations, I will be, we will be turning to the questions. Most likely, I'll read the questions. If time permits, I might be able to unmute a few of you to allow you to ask your questions directly. Without further ado then, let me turn the microphone over first to Mick. Good afternoon. It is nice to, I can't say meet so many of you online, let's say connect with you online like this. Thank you very much, Rachel, for the introduction, and thank you, Wyder, for organizing this seminar on the topic that is closer to my heart than almost any other topic in the world. So I am delighted to be talking here. Delighted but also slightly flummoxed because I think it will be evident to most people. We are talking about a future scenario which is extremely uncertain and likely to be extremely variable from one part of sub-Saharan Africa to another. We don't yet know what will be the economic impact of COVID, whether it will go away and come back and there will be further impact, how long it will take to recover. We can be fairly sure that there's going to be a lot of variation from one country to another. But I'm going to argue, and I want to talk about this at the end, that it would not be the right moment for governments and ministries of finance to say, well, okay, we'll just wait and see what happens and then think of our tax response to this because I think it's very important to be thinking of the tax response now. And I will explain that later. But before we start talking about the substance, I have a question for you. It's an online poll here. And you have the choice of four answers to the question. The question is, how important is it to start taxing the informal sector? And your potential answers are A, very important, B, moderately important, C, not very important, and D, I don't know what that would actually mean in practice. So let me give you 10 seconds or so, silence, to think about that and to vote. And then we will move on. Okay, lots of votes coming up very fast now. Okay, well, there might be a few more votes, but let us move on at this moment. Okay, I'm just going to start with a simple statistic. Government revenue as a percent of GDP, the standard measure of how much revenue governments raise, as you will see, and you shouldn't be surprised, Africa is fairly near the bottom of the list in terms of regions, on average, with an enormous variation within Sub-Saharan Africa, in fact, slightly higher than South Asia. Now, whether this is a good figure or a bad figure is actually a very open question. Some people will look at that and say, look, that's only half of the figure for Europe and Central Asia, we need to raise a lot of revenue. But there are other reasons for saying, well, actually, that's not as bad as you might think. And you certainly shouldn't drive yourself into a depression and say, Sub-Saharan Africa can't raise tax revenue. Because in some respects, Sub-Saharan Africa is not bad at raising tax revenue. And tax revenue has been increasing in recent years. But also tax administration in Sub-Saharan Africa is, I wouldn't say it's very good. I would certainly say it's much better than some people believe. We still have parts of the world where people think that Africa has peculiar and special problems with establishing and managing modern government institutions. And they're rather surprised when they see how well Africa does in terms of raising taxes. And if we look at the quality of tax administration, which we can't measure by any single figure, but we can measure by quite a few different figures, Sub-Saharan Africa doesn't score badly. I just put in this graph some figures that ultimately derive from the World Bank Enterprise Surveys, which is the proportion of occasions where the tax collector comes along to a company and the company reports this is typically associated with a request for a bribe. As you'll see, the figure for Sub-Saharan Africa, it's nearly 20%, which is not good. But the figure for some other parts of the world is actually appreciably higher. So Sub-Saharan Africa does not score at all badly on that. And there are in fact a range of other measures of the quality of tax administration that I'm just going to summarize here. They are all summarized in the book, which you will see on the screen, which is still fairly up to date. In terms of tax effort, which is a statistical measure of how much taxes have raised relative to expected taxes, Sub-Saharan Africa does fairly well. In terms of the proportion of direct taxes, Sub-Saharan Africa does fairly well. We're often told that low-income countries depend heavily on indirect taxes. Broadly true, but Sub-Saharan Africa actually does better than many. If we look at the measures of tax administration that come every year from the World Bank in paying taxes, well, the amount of staff time taken by the typical company in the average country of Sub-Saharan Africa to comply with all the tax process is in fact, again, not high by global standards and is considerably lower than some other regions of the world. And from a similar survey, something called the Post-Filing Index, which is basically the time taken by the revenue administration to correct a problem that has been identified in the accounts, the company files. Again, Sub-Saharan Africa is relatively efficient. So we don't, sorry, I'm having a problem moving my screen here. I beg your pardon, folks, for some reason, oh, maybe it's here. Okay, sorry. Yeah, so the tax administration is not bad. And a major reason for that is that a lot of tax reforms have been implemented in Sub-Saharan Africa over the last 20 to 30 years. And these are very complex. It's very hard to begin to summarize them. But we can make, give you a few examples, compared to 20 or 30 years ago, the typical taxpayer in Sub-Saharan Africa is less likely to need to have a physical face-to-face meeting and to make the actual tax payments with the tax man. And that's a very good thing because this is classically the site of corruption and collusion. Even better, possibly, the taxpayer is less likely to have to go and meet one tax man in order to pay her income tax and another tax man to go and pay her sales tax or VAT and another tax man to pay excise, et cetera. So that's also very positive. Further, the tax man is much more likely to be a woman than 20 or 30 years ago. And there are various good reasons. Millie can talk about those if we get the chance later. Why we think that is actually a good thing, not just for society in general, but actually for tax collection. And further, our tax woman or tax man is much more likely than 20 or 30 years ago to have a professional qualification and a specialist role related to that qualification in something like IT or accounting or taxpayer services or taxpayer education, human resources, internal vigilance, research or law. In other words, tax administrations are much more sophisticated organisations than they were 20 or 30 years ago. But, and I should add in addition that virtually every country in sub-Saharan Africa has adopted VAT and VAT is now the largest single source of government revenue for sub-Saharan Africa. Despite all that, actually we're not moving forward very fast at all in terms of government revenue as a percentage of DDP. There's a whole range of reasons why we can't give you a very clear answer and they're disputed. A lot of it's to do with revenues from natural resources that vary very much from year to year and depend on natural resource prices in world markets. But we can say pretty conclusively that on average in Africa the ratio of government revenue to GDP is somewhere being completely stationary and increasing very slightly. So certainly tax revenues have been going up but that reflects the fact that GDP has been going up. So we're not actually making major progress and even before COVID people were pointing out that those expectations that governments in sub-Saharan Africa would be able to fund to a significant degree the achievement of the sustainable development goals were just not, we were not on the way to meeting those expectations. So why? Well there are various ways of approaching the why question but however you do it you're going to get to the politics of it eventually. So let's start with the politics of it and especially since Millie is here let's start with Uganda. This is a piece of research done by Millie's colleagues two or three years ago that looked at the taxation or we could almost say non-taxation of what are technically rich people high net worth individuals in Uganda and I'm just giving you a couple of illustrative figures here. There are many more in the paper itself but the figures are quite striking in the year 2013 to 2014 the researchers identified 71 government officials who they believe from various sources to be rich. Only one of those 71 people paid any personal income tax in that year. There were 56 companies associated with those individuals and only 17 of those companies paid any corporate income tax in that year. It's not just Uganda we don't have a great deal of research on these issues but very similar research has just been done in Rwanda again by the Rwanda Revenue Authority staff themselves and here is a very similar figure 2018 they identified 42 people who were probably high net worth individuals on their definition. Of those 42 only eight ever filed any kind of personal income tax return in that year which doesn't tell you how much tax they pay but it's not a very good sign and in fact the other bit of the slide shows if you look at the income tax law there are as you find in many tax laws there is a kind of odd wording of the requirement to file an income tax return that allows many rich people to say well you are taking income tax from my salary and the money I get from my investments is already being withheld I don't need to fill in a return we can again go into that later if we wish and there are plenty of other cases of under taxation in Africa that are effectively in some degree or other the result of political decisions and governments not wanting either not wanting to do things or succumbing to pressure to do the wrong thing. These have been summarized in a ICTD working paper of three years ago but the major ones are wealth and property are grossly under taxed it's very striking that an increasing number of African cities property values are extremely high some people have an awful lot of money invested in property but they pay virtually no tax on it mining has tended to be very much under taxed alcohol and tobacco very much under taxed tobacco a particular problem because consumption is growing fast and it's a bad thing to do for health reasons the exemptions that are granted unnecessarily to investors are almost everyone who's researched this says they are simply too large and they are a very significant fraction of potential potential tax revenue in many countries this is not a marginal issue it's a very big issue and again VAT exemptions as I said earlier Africa has almost universally adopted VAT VAT is in fact the biggest single source of income but it is full of holes of various kinds and could actually generate much more revenue if government didn't give so many exemptions and in discussing these issues I'm not talking at all about the challenges of taxing transnational companies and of digital economic transactions across borders which is a very big and a very ongoing subject but they don't have time to get at that here partly because this is something that's not immediately within the reach of any individual African government there's limited amount they can do about this but so there are political explanations but politics doesn't explain everything and the other one other way of looking at is looking at the efficiency of organizations and you know how good actually are revenue authorities and other tax collectors in Africa well we don't have a very clear answer to this but I think that there are two quite important identifiable problems and one is that information technology that's now to some degree used in virtually all tax national tax collection organizations in Africa is very much underused for in all kinds of ways and for all kinds of reasons and simply does not generate the benefits it should benefit so it should bring now that is on the one hand it's bad news on the other hand that's actually quite good news because this is something that is relatively fixable in a short period of time the other issue I wish to discuss but do we have the results of the poll here before I go into this I removed it from my screen here we are okay very important moderately important not very important I don't know what it would mean in practice yeah I'm afraid this is bad news um this is kind of what I expected um that the majority of you two-thirds of you think this is at least a significant problem um I'm going to be for broccoli I think you're wrong I just think you're wrong um and I'm going to say something even more um confrontational about it in a minute you're not wrong if you are referring to wealthy people who are engaging in all kinds of economic activities and transactions that there's somehow for example doing in cash and avoiding banks and therefore avoiding taxes but if you mean by the informal sector small operators people selling things on streets people doing little bits of metal bashing in their backyard and all those informal things that are done I do not think there is a significant problem I don't think they should be paying tax most of the time and I'm going to be even more provocative by saying I think there is an obsession in many parts of sub-Saharan Africa with registering a large number of new taxpayers called the informal sector that is almost entirely unproductive um again Uganda will come in here and Millie knows this story very well the Uganda Revenue Authority enormously increased the number of people that were registered for taxation over a short period of time um ended up with a very large taxpayer register that was extremely inaccurate um useless for many purposes not usable in terms of actually collecting taxes most people continued not to file or if they filed um they just filed a mill return saying uh not no economic activity or not enough to justify paying taxes and in various ways that is a story we see across much of sub-Saharan Africa an obsession with registration registration um I don't think small operators should be paying tax anyway and certainly not to national governments they might need to pay them to local governments I'm going to be particularly provocative here because I think this obsession with registering large numbers of small taxpayers is probably playing a rather malign um role in politics I think it's actually distracting attention from the big problem and the big problem was those slides I showed you a little while ago let's go back to those slides that's it's that distracting attention from that problem uh so I would be really happy if uh next time that poll is done many people say this is not a problem or if it is a problem it's certainly not a significant problem or I'm not even sure what we mean by this so um where are we now uh this is my summary of what I think the current situation is although I'm looking forward to Millie will tell us a little bit more and we only have I think fragments or I only have fragments of information about what's happened to revenues and revenue collection since Covid struck we're pretty sure revenues are falling there's less economic activity governments have often formally deferred collection but there are all kinds of very practical collection challenges anyway it's likely I have no direct evidence for this but one or two suggestions that the more digitized effectively digitized revenue administrations are coping better principally because they are dependent less on any two individuals meeting face to face or whether in the office or in a business or somewhere else and things can go on nearer normal thirdly it's highly likely that subnational governments will be particularly badly hit in this case because their revenue collection is almost entirely done on the basis of face to face and written records very few digital records it'll be very difficult for them to raise revenues in these certain in these circumstances and fourthly I think we are in a position where governments will be thinking about the need to raise more revenues in I don't know when few months a year two years it's going to vary from country to country now this is potentially a very worrying situation and it's not just about tax it's about politics and governance and trust in government more broadly there are a range of threats here and here this summarizes four of them one is that governments might find it really difficult to even get revenues back up to where they were because people are poor and they feel that they have not been well treated in relation to COVID and they're just not going to pay secondly in related there's a real risk that the governments and tax collectors will go in rather heavily they'll have targets and they will just achieve their targets whatever and that is going to involve a lot of unfairness and some people paying just because they get caught and that could worsen the political conflict and third taxation could become extremely contentious and fourthly quite likely that informal taxes of various kinds on poor people which are often quite high might increase so I want to conclude on a slightly more optimistic note and saying but I think this is also a time of some opportunity and that's why I hope governments and ministries of finance and revenue authorities will be thinking about these issues now even if there's not much they can do this month or next month this is a sort of a bit of an idealistic manifesto and it's not supposed to be one size fits all but there are basically three principles here and the first principle says that it would be very important to avoid putting additional tax burdens on the poorest 50 percent or even the poorest 80 percent of households because they have probably suffered more than anyone else so far from COVID both in terms of the disease itself and the economic impact and it would be really unfair to put more burden on them second one says you should also avoid to the extent possible putting revenues revenue burdens in such a way that they're going to impede business because business needs to recover but and there's a big but there's an awful lot of wealth and high income and capital gains and many other things that could and should be taxed and this is where the burden should fall and thirdly one would hope that governments will be able not just to make changes in tax revenue but to tell an extremely good and convincing story each fitted to their own situation about why they are changing the tax system why it is fair to change the burden of taxation from poorer people to richer people and hopefully to say that at the same time they're going to take advantage of tax changes to try and address some bigger societal problems including air pollution environment climate change etc which are certainly not as possibly as immediately urgent in many much of Africa as they are elsewhere in the world but are very fast becoming very urgent in Africa so on that some optimistic note I will stop and I will hand you over to Millie who will tell me why I'm being far too optimistic right Millie wonderful thank you Millie thank you can you all see my screen yes I see it here okay okay good afternoon to you all thank you in wider for the opportunity that you've given us to share this the opportunity you've given Uganda and the work we've done together thank you Mick for that great very provocative presentation that you've given I'd like to speak to speak to this presentation and I'll share as I speak to what Mick has shared I have a slide there showing what Uganda revenue authority is our mandate of course is to collect tax and our mission is to provide an environment that is a delightful experience for revenue services and business facilitation and this speaks to what Mick has been sharing that we should move away from just increasing the numbers but plan and do proper revenue administration as we go ahead and on my slide there you can see though Mick shared that that tax to GDP in sub Saharan Africa is 19 percent for Uganda our target for next financial year is about 14.5 percent of GDP last financial year we had about 15 percent but when we rebast our GDP we went back to 12.9 so there's that that constant struggle to move up and it speaks to a lot of what Mick has been sharing so before I go to to the impact of COVID I'd like to talk briefly about some of the things that Mick has raised of course we've carried out these studies with the team and rightfully so when you look at the contribution of of our indirect taxes to revenues if I consider both the locally generated and the ones that are from imported products we are a little above 40 percent of the total revenues that we collect so true indirect taxes and VAT for Uganda is similar to what Mick has observed and you find that from that study and as I'll share the study we carried out we are now having more focus on the high network individuals we actually created a unit that goes out to look out for these high network individuals and now more than ever as I'll share later we are also getting into the property area the rental income tax and who are these individuals that are owning property that we need to mobilize revenues from when we come to some of these the political decisions not to tax you find that like I've said when we look at the high network individuals who are having properties we have done quite some analysis informed by some of those studies and the information that we are having and you find that a number of them yes are hiding behind reinvesting the revenues rather than putting a lot of interest loan interest from loans and some of the loans are from inter companies they are having a number of branches of companies that the directors create a number of many other companies and the revenues siphoned out through that so all that analysis is now going on and we hope that we'll be able to address a number of these areas when we get to the point of why is IT information technology underused some of the observations we've we've come to is one of them is about the skill about the skill and it's very important that as the sub Saharan African or developing countries bring on board the data warehouses and and other tools to bring information together they must not forget skilling the staff because there's one thing having information but there's another being able to use it so with the stuff that we are having now who are doing more of this analysis they are able to do an eco mapping analysis where you're able to bring all these different submissions the vat the corporation tax and all those in order to be able to assess and identify who are the high networks and where's the revenue coming from so one of the issues that are coming through is the skills maybe the fear of information when we talk about data scientists and what a number of tax collectors are mathematicians or probably you know when you talk of science some people get lost and also focus it's very very important that the leadership the leadership is focused towards use of data analysis to inform to inform revenue administration and again when he says the obsession of registering large numbers indeed and I'll say that uh yes we have a register of about 1500 uh 1.51 1 million 500 thousand taxpayers but near to half of that uh taxpayers whom we consider to this smaller medium whose turnover is less than uh two million dollars two million u.s. dollars a year so you'll find that yes our register has all these who are small and how do we expand this and this I think has also apart from the political reasons mech has provided there's also the focus when you focus on numbers because the key performance indicator that you've given stuff is how many are you bringing on to the register you get it wrong and that you are a we have changed the focus now we are looking at value how many value or how much value are you bringing on board and that again takes us towards doing more of analysis so that by the time you go out to register you know you know and when you have these data warehouses where information comes in or data links and or that then you're able to identify who are the people out there including working with other government bodies and I think that's one thing make it not bring out one one of the areas we are grappling with and developing economies of Uganda in particular is how do we link with other agencies there's one thing about information being standard across the board so that if this is mealy in URA you will find her the same mealy in immigration the same mealy across all data sets so you're able to bring in this information and be able to so that is an area that we are also still working on really to be able to to get to to tax the right people so I'll now move very quickly through these slides from what Mika shared and from what has been out there we are facing the same the same challenges we projected the economy to grow at six right now we are 3.1 percent we have both the formal and informal part of our economy affected for the formal it's obvious hotel tourism for the informal we have those small people that make has talked about that the ones on the street the vendors and and and all those who are going through this and how has it impacted us as a revenue mobilizing agency we have to to quickly move into staff working from home change of culture anxiety we have anxiety of the staff who are working from home and the ones at the border stations and for our clients of course lockdown is affecting them to be able to file and pay on time and some of them are having to change their businesses very quickly those who are producing alcohol and moving into sanitizers and and things like that so it is a whole new experience for all of us and and our clients of course revenues have declined like mick mentioned and without going into a lot of detail they declined so much in apple and we are thinking maybe apple was our climates but still like mick shared we don't know will it come back will it go with it so so we are just we keep hoping that the situation will will really improve but you can see we can see that in may though generally the revenues declined compared to last year we are still seeing hope in some of our of our sectors that are showing some improvements where we had input declined so much especially like from our highest countries like China Kenya Tanzania we are seeing them pick up in may we don't know what will come through in June but we are still quite hopeful and you find that um uh there are a number of things that we are doing of course for stuff we've put policies in place masks and order i want to speak a little more on revenue on the area of revenue we are encouraging our clients and taxpayers to do tax health checks and as they are doing that we are doing a lot of data analysis internally and it speaks back again to what mick has shared what are the revenue administrations or governments doing to prepare for their posts you can't sit now and wait until it has ended so through this data analysis we are discovering a lot of potential revenues and we believe that it will support us not to focus on on the small taxpayers another thing we're doing is we are providing installment payments for them the tax reliefs for raw materials all this has been done by so many other countries across the world so i'll speak to the area of the electronic commerce and digital economy and as well as real estate why are we focused on digital economy because everyone is going e everything is going digital and we believe that that is where we should follow the money now so as we are doing analysis we are also putting together strategies on where shall we find the tax point is it at the cuts when people put in is it at the point of paying so we are coming up with those strategies so as we are doing the strategy for for the digital we are also coming up with a strategy though i've not mentioned it yet for the small for the small people what relief are we giving them what analysis are we doing because we know that out some of our clients hide within the small ones so we are doing analysis to establish who are the small and should remain the small and then who are those and it speaks to to mix poll the poll he sent out and said informal sector we need to clearly define who is in the informal sector and for us who is small who is big but is hiding in the informal sector so that we get you out of there and support you to be able to mobilize revenue in order not to get it wrong like me has shared that if we we don't have a strategy we will just tax whatever is available and will not be able to get it wrong so my last slide here is just to demonstrate our moving towards the online services we've automated a number of interventions that our our interventions with the with the taxpayers so we have interventions in the domestic taxes the customs and online payments and we've enhanced this and we believe this is the new normal and like me say that as as as revenue administrations modernize there'll be more of online than the that than the face to face and I believe this will will fairly prepare us for what we expect to come in post COVID and also enable us to mobilize enough revenues for our respective economies to be able to to pick up yeah thank you thank you so much thank you very much thank you Mick and Millie this has really been a thought-provoking set of presentations and I can see in the q&a box here that we have a number of questions for both of you but before I turn over to the questions Mick would you like to respond a bit to Millie's presentation to Millie's discussing comments um yeah thank you right you know let me pass on that because um I was very pleased to hear many of the things Millie said and we we seem to to think rather alike surprisingly you would you would imagine we'd met before right Millie which we have many times um let's get the question Rachel okay then let's kick off um so I'll start with a question from Paolo de Renzo so the question relates to the opportunity slide in in Mick's presentation it looks more he says like an optimistic agenda or it look yes it looks more like an optimistic agenda how can it become a realistic or a politically feasible one which reform coalitions in different african countries could provide sufficient pressure on governments to adopt these reforms can we get Millie to answer that one okay um yes this this uh this slide looks optimistic however it's important that um that governments sit together and I think the the environment is right now is that all government agencies and governments are now thinking what happens our our economy is going to have a freefall until um we are unable to support something has to be done I'll I'll share one like like I said we are coming up with the strategies to to to ensure that the poor the poorest are not pressed but the ones who are in the sectors of the winners are able to support the the economy to grow and one of the areas I'll talk about for Uganda the agricultural sector which has forever um not been able to attract attention is attracting a lot of attention now and I believe we will be able to get in there and be able to support the economy because it is it is a do or die you either support your economy grow or it dies off so it it must be done and and in life you always have to be optimistic you must be optimistic otherwise you'll not get the energy to move and be able to bring uh your respective economies back yes I just insert one a couple of senses on that and I agree with Milly um Paolo I think my main immediate target for that well obviously it's partly civil society groups but it's actually principally governments because I think many governments in Africa if they think ahead will realize that they might have some very serious political problems if they don't have enough revenue they're trying to raise revenue in ways that upset a lot of people and they a lot of conflict breaks out over who is actually to pick up the bill for covid um then I think they could be in serious problem and I think they could also many of them realize that actually even if rich people do pay tax personal income tax even if more companies do pay personal income tax even if we put up excises on luxury goods you know the top 20 percent in Africa and they're still going to be fine we're not talking of making people poor here um but we're talking of you know paying enough um to government that they have a slightly more secure and less politically fractured environment in which to live and to make more money in future thanks um so we we have more and more questions here we have a number of questions about high net worth individuals and maybe I will start by just picking one so we can we can get on to some of these questions this is a question from lucky star me and dazi who says thank you for the presentation the number of high net worth individuals is not huge in the two country examples used rwanda and uganda that means that even taxing them will not increase revenue substantially how then do sub-saharan african countries bring in more people into the taxing bracket if it's a bad idea to also tax the informal sector does meli want to take that first yes i'll take it first um the number of high net worth individuals may not be big in these countries but you find that uh for for a number of developing economies 80 percent of the revenue comes from 20 percent of of the the taxpayers and like i shared almost half of ours uh in in the small and medium so even if you tackled about 10 or 15 high net worth individuals you would have a significant increase in the revenues they would cover about uh 200 000 of the small ones and you'd be able to strike a balance like me shared is that you do not press the small ones but you you it's more aligned to the that the income inequalities in our respective economies you'll find they are those who are very high and then they are those who are very low in in the income bracket so yes they may not be many but tackling them will bring an impact change of behavior and will be able and once the the lower ones see that the ones earning a lot are paying it's an automatic change of behavior and everyone will be tax compliant i just add there you're absolutely right i mean the individuals are small and you know we put the figures there because they signal a problem but i mean they signal a much bigger problem and i think if we're looking for more revenues again it's going to vary from country to country according to the situation but most countries could quite quickly within a couple of months either increase existing excise taxes on certain luxury goods consumed mainly by rich people or they could introduce them from a fresh and that will make a significant difference and in fact let me just do a little advertisement for wider here wider has just published a study that's been done again in Uganda Uganda has a lot of research on excise taxes and it shows very clearly that on balance excise taxes in Uganda which are quite significant do fall more on rich people than on poor people but they also show that the excise tax on locally brewed gin falls mainly on poor people whereas the excise tax on fuel falls mainly on rich people so it's not difficult once you know broadly the pattern of expenditure of different groups of households it's quite easy to go through and say well excise taxes on this they will mainly be paid by the rich and those will be paid by the poor so it's not hard to design an excise tax regime that would actually generate more revenue but that's one wealth taxes and we can start by sensible levels of taxes on housing and other urban buildings I mean almost completely untaxed in Africa so that's significant just making more effort to make sure that more people actually who are likely to be wealthy submit personal income tax returns and that these get to some degree audited this will take us well beyond that very small number of high net worth individuals to the many African countries thousands of people who can pay significant amount of money and currently don't pay it. Milly mentioned earlier in some African countries a lot of income is generated by people who own properties in capital cities and rented out but manage not to pay any tax on the rental income. Uganda has been tackling that as some other countries have but again it's another source of revenue so there are quite a few oh and the biggest one the biggest single one is the unjustified tax exemptions for investors it's not unusual for people to calculate that the tax lost through unjustified tax exemptions is somewhere in the order of 10 or 20 percent of existing tax revenue in other words if you can cut down those unjustified exemptions which are not bringing in additional investment you know you can bump up your tax revenue by 10 percent in two years or some such figure this is not this is not marginal this is real money. Thanks I'm going to go to two questions from Nick Matheson which I think follow on quite well from your your comments just now so actually it's a three part question but I'll just read two of two of the parts first on the granting of excessive exemptions which specific exemptions would you prioritize to crack down on and secondly which countries would you say have the political will to introduce higher property taxes in sub-Saharan Africa? Millie again I think you go first okay I don't know on any of these things I don't know which countries have the political will the one reason I don't know is because these issues of the gross underpayment of taxes by certain categories of wealthier people in Africa has barely been discussed so far this has not been on the agenda and you know people like Millie and me and other people have been trying to do it and I think we're fairly early at the stage there and until you get a good public discussion of this you don't have a real sense of whether this is going to be picked up and someone is going to say yes this is what we need to do. There is an interesting case on property taxes that let's hope it works but the mayor of Freetown in Sierra Leone has just pushed through the city council a major revision of the property tax system that results in a very substantial increase in property taxes on wealthy people and they just started collecting about two weeks ago. I don't know whether this is going to work fingers crossed but here is a smart politician who realized that yes there is something in this for me by introducing a fairer system that people perceive as fair and getting enough revenue to do interesting things so that's on the property taxes on which exemptions again we can't give a specific answer but the exemptions which are given to investors and there are an enormous range of different types of exemptions have been examined again and again and again by economists and other tax specialists and they always come up with the same answers that there are far too many of these and they're given in the wrong way and they're not sufficiently tied to real investment and real improvements in productivity coming in and it would not be difficult for us to design a system that resulted in a much closer connection between exemptions and you know real investment coming in from outside. I'm sorry that is a very vague answer they say the professional consensus on this is very very strong it's just that the political incentives for governments to carry on giving indiscriminate exemptions to their friends or people who put money in the right bank accounts is rather strong also. Okay Russia are coming yes I'd like to approach this from the angle of visibility into what's happening and from what Mika shared you can see that for as long as the economies the tax administrators are not able to quantify that the exemptions that they are saying are excessive are not properly given and are not really impacting on revenues. In my in my view exemptions is a tool that governments use to either attract and and make attractive the environment so as professionals when we get into there and try to put reason to eat it doesn't align very well with the political direction so for me I would rather than go for this is because we've we've even recommended recommendations have come through that let's have exemptions that are sector-wide so that you know that this sector has been exempted and and it is clear but I think it is a tool that is used and I kind of shy away and allow the politicians to do to do their job because everyone is an expert in their own area you're an expert in that and their next experts in in their political arena when we get to the to the area of political will to increase property tax again and and this speaks again very much to what Mika was saying what are the plans what are the visions what are the analytics how are you using the information technology that is available the data and and everything in this area if we are not able to quantify and and make visible like I'll say for the case of Uganda we've had our president bring back the bills in line with the with rental income tax because he believes that there is value there in rental income tax yes most of the property owners again are the decision makers in our respective economies but when you make visible the the the quantum of money that these people are making then it makes it difficult for for them not to move with the with the proposal to tax those areas so that is one of the things that we've been working on of making it visible how much revenues are coming in and how much money is being used to to remove these revenues and that has convinced the political head that this is an area we need to go in and once you have the political heads they are then you're ready then then it will be very difficult for for for this not to go through so I believe one of the things we need to do is to do more work in terms of analysis and put on table the visibility into these the properties and and maybe even the exemptions but like I said for exemptions I think it's a tool and it will take because so much work like Mika said has been done on this over in different countries with different teams but I think the politicians use this as a tool and we may not go very very far in there but we may go far on the other proposals that Mika shared in terms of planning in terms of taking care of the poor and in terms of looking for for the rich and making visible what they are earning so that they are able to give their take to the respective governments thank you I think that's maybe a nice place to end unfortunately I'm under strict instructions to end on time there are a number of questions still here in the box and I hope that our our team here at wider can save them for us so you have them as well but I'd like to just thank Mick and Millie for really interesting and thought-provoking presentations as we think about how COVID-19 is changing development in the area of taxation thinking about threats and opportunities in particular thank you very much thank you very much thank you thank you very much


started and maybe you can give us a little background on yourself and what you did with Philip Morris International. Yeah. So I started my career in the U S, but went to PMI pretty early in my career in 2002. I was part of a team based in Switzerland that was helping modernize, uh, what we called central Europe. So countries like Poland, Jack, Hongry kind of all the way down to Turkey. Um, and then I went to Asia for five years and ran the commercial teams in Taiwan and later Malaysia and came back to Europe to run Scandinavia. The twist in my story is in 2008 when Altria and PMI split into two companies. I chose to stay with PMI and, uh, and then later fast forward when I was running Scandinavia, um, Altria called and it was a great opportunity for us to come back home on the, on a personal level. Um, but professionally it was awesome too. It was, uh, I got a chance to run their corporate venture unit. Um, and then later, uh, one of their larger business units, which was all the cigarette brands except for Marlboro, which was about a three and a half billion dollar P and L. Wow. Congratulations on all your success. I know, uh, everyone is excited to see what you can do with TAC global alternatives. There's 64 people now in the live stream and there's a lot of really excited, uh, investors in TAC global alternatives that have been invested for the last few years that have seen it kind of go up and really go from an idea, really just an idea to a product that is actually now selling internationally. In fact, I still have the original packs. I don't know if you've ever seen this, but this is one of the original packs. Right. So like I still have the original pack. So we've really come a long way with TAC and we're really excited to see where you guys are going to go from here. My next question is, and there's a whole bunch of questions from the audience, but I'm going to go through some of the questions that I have first, um, is you were also the head of Altria's corporate venture fund. What kind of things did that, did they look for in terms of investment or acquisition targets? You know, personally, I didn't even know that existed until I saw it in your work history. So just wondering how it fits into their business model. Well, I've been away from Altria for quite some time, but, uh, I can talk a little bit about corporate venture units on a whole. And Altria would be no different. Most corporations today, um, I'd say when we were reforming Altria's unit back in 2012, that we were still kind of at one of the first to the table, um, but most corporate venture units are run for two reasons. One, it's either to gain access to technologies that you need, um, or two, it's to invest in companies that you most likely want to acquire at a later point in time.  And by having a corporate venture unit, it allows you, if you miss the innovation cycle, you can catch up quick. Um, you know, a really good example to that is the e-cigarette. Um, when that was real, when I came back to the US in 2012, that was really, uh, nearly a frenzy. Um, and if you actually look at it from a historical point of view, very few tobacco companies actually, uh, really had R and D investments in that space and most have since acquired, um, an e-cigarette company, if not more than one. So, you know, a corporate venture unit is a, is a, is a partially offense, but also defense in terms of helping you innovate and accelerate, uh, your growth strategies of a corporation. So that brings me to the obvious question. And I know the question that everybody wants to know, what brings you to tat of all companies and why not continue to work for one of the big tobacco firms? Well, I left, um, Altree in 2016 and really since that time, I had primarily been doing much more entrepreneurial work. Um, I was helping, uh, private equity firms acquire companies or turn them around or even helped build a small venture fund in Richmond. So, uh, that was a space I was, uh, really familiar with. And when I tripped over tat, um, doing some of my own research, probably two years ago, um, I was intrigued by the idea. Um, I didn't think version one of the product was there yet. Um, and then I guess probably early part of this year when version three was really kind of coming to market, uh, was when I started having some conversations with the board. And, um, I like to use the term, I was kind of in semi-retirement. Um, I was doing enough to keep myself busy and excited, but, um, you know, I didn't, I was at a point in my life, I didn't need a day job. But, uh, the more I got to know the tat team, even more intimately than just beyond an advisory role and started to see version three of the product, I really got excited about the idea of providing the adult tobacco smoker, an alternative to their product that wasn't a completely new form factor. Um, and it was around the same time, I was really glad that, uh, the company listened to me and a couple others on the advisory, uh, board to start to invest in some of the early science that tells us we can be part of that or potentially can be part of that harm reduction conversation. And that really excites me.  Um, and we're really starting to see the early signs of that, uh, here in our home market in Las Vegas. In your own words, can you summarize where tat is right now in September, 2022 and give us an idea of where you see tat by this time next year in one year? Well, that's been on a journey, right? It's, uh, it's, it's had three different versions of the product, um, to market and this one we feel really, really good about. Um, I wouldn't be here, um, if it wasn't in a good place to scale. Um, and what we've already learned is that, you know, in, in one of the markets where we've been present and we'll talk more about this as time goes on, but you know, reintroducing version three, like in, in the Ohio market where we have our atco operations, um, has been a challenge because they had experienced version one and two. And, and, and, you know, I always like to talk about brands, brands are just like people, right?  So, um, Ohio has been a great place for us to learn, but I can tell you from markets like out here in Las Vegas that didn't have version one and two. And when we're introducing the product to the consumer for the first time, the response is really amazing. Um, so, you know, we've been, I mean, I've been here, I think three months almost to the day, um, we've been hard at work over that period of time, building out a three year plan. Um, and we're now to point to where they were in the final stages of fine tuning that, but elements of what you see us doing out here in Las Vegas are clearly going to be part of that. Um, we've worked with one of the leading data providers here in the U.S., a company called IRI, many people will also know a company called Nielsen. Um, we've partnered with that group and they've really helped us build out a methodical go to market plan where we can combine both our sales and marketing activities with in a geography because the United States is a big place, um, and you've got to synergize those efforts. And what we have learned to date in Vegas is that when we do synergize those efforts, get mass distribution within a specific geography, combine that with a whole lot of marketing activities, um, you'll, you're seeing results like what we've already announced in Speedy Mark for, we're just from July to August, we saw triple digit growth rates in sales. Wow, that's really impressive. Now I heard you're on the road quite a bit lately. And Texas for Buckees, England and Germany for GGE and the Inter-Tabac trade show. Can you tell us how that all went? Yeah, it was, it was for sure a busy two weeks. Um, let's start with Texas. Um, you know, this is actually, if I rewind back on Texas, if my memory is correct, I think really Buckees found us. Um, Buckees is an iconic, um, convenient store chain in Texas for those that don't know it. Um, it has one of the largest convenient store chains in the world. I think something like over 150 gas pumps. It's really just an amazing store. Um, and I happen to know the owner of Buckees for quite some time, or at least four or five years. And I know when the team first started to engage down, my, uh, I, uh, pinged our friend, uh, friends of Buckees that, hey, you really ought to take a look at these guys with tat and really glad that was able to come to fruition here, um, in just the last month. Um, but that's a really chance for us. It's really will be a springboard for us in the state of Texas. Um, through the work we did with IRI, it was really clear. Texas is an important state. Um, you can almost think of Texas as many markets within one. Um, but Texas is one and landing an account that's so iconic like Buckees, um, couldn't be a better playbook for us. Um, and so we're super excited. We, uh, we had dinner with our team, visited several stores, um, the, the amount of, uh, sheriff space we've got right behind the counters. I think they have over 140 counters in their, in their 40 odd store. So it's, it's a, it's a really great testament for a company our size to get such great attention from a major retailer. And I'm pretty convinced that the success we'll have there and SS were seen in Speedy Mart and other chains, um, the, the, the future for us is really quite bright. Um, my trip to Europe was, was, uh, in many ways very similar. Um, you know, we have a, uh, uh, growing international business. Um, we've now just recently shipped our largest order to the UK market. So this was a chance for me to go over and, uh, meet with our partners there in the UK and really spend some time, um, hoping to like, listen to any international company, when you start spending energy, you're going to have a teething issues in the supply chain. And we hopefully that we're at the, we're at the end of those teething problems. Um, and we can start to ship more regularly. And, um, what I'm really excited about is some of the work they're already doing. Uh, I think they're going to be selling our products at a major festival this weekend in London. Um, and I look forward to getting back there in early part of, uh, or early towards the end of the year so that we can really hone in on a sales and marketing plan for 2023. And then the last stop I made was, uh, was at Enter Tobacco, which is one of the largest, uh, trade shows, uh, in Europe for the tobacco space. And I've been really intrigued by, um, the inbound interest we've gotten from distributors and potential partners abroad. And that was really a chance for me to get there and meet a lot of these people as they're all in one, one city for, for several days. And it was a chance to meet, um, you know, people that have been reaching out to us to potentially carry, uh, partner, partner with, uh, expanding distribution across the continent. So no news to announce today. So sorry for the audience, but, uh, it was a successful two, two to three weeks of trips, uh, um, from Texas to the UK and, and Germany. So glad, but glad to be back out here in Vegas with the team here. Congratulations on all your success and all your travel and, you know, spreading the news and spreading the word and getting this product out there. I remember sitting down with the team when they talked to me about tat with these initial products when it was just an idea. And to actually see this now growing internationally and being on shelves, trade shows, gas stations, local convenience stores. It's really amazing to watch the progress. And it's really just getting started. So that leads me to my next question.  And it's a unique term that I haven't really seen before. And he used it to describe chains like Speedy Mart and Bucky's, which you just mentioned. What exactly are these anchor accounts? Can you kind of explain what that means when we see that in a press release? Absolutely. So the convenience store sector here in the United States is still a very fragmented sector. You know, you have a couple accounts you could qualify as national, maybe a 7-11 or Circle K, but many are like Bucky's or a Speedy Mart that have a very strong regional presence, typically two to three states. And I'm just talking about the chain account market, right? And that's only about that's approximately half the market here in the United States. And then the other half is mom and pops. Well, it's really hard when you're bringing a new product to market, much less a category creator like Tatt, and not be able to direct people where to go buy the product. So one of the really powerful things we've been able to do in the marketing of our products here in Vegas is be able to say this product's now available at Speedy Mart, or this product's now available at Bucky's. And that helps us build that early following or early adopters to adopt our product. It's just really hard to say available at a convenience store near you. And there's lots of those, right? So what we're truly trying to do is make sure that not only people know about our product, but know where they can buy it. This is not a category where people typically buy their products online. This is a this is a category, at least from a U.S. perspective, that people are buying one to two packs several days a week. So you really have to have the presence of the right accounts. And then all the other accounts will tend to follow, right? It's a super competitive market. Once they find out a new product's in a new store and it's selling really well, then it's a fight. So what we hope to have is a tipping point that's in our future where we're having to call accounts less and more accounts are calling us based on the success we're seeing in these early markets. Now that leads me to my next question. Another thing that stood out from me from your tobacco experience in the industry is that you work directly with Walmart account for Altria. And you were based in Arkansas. Can you tell us a little bit about that? It must have been quite an experience working with one of the world's largest retailers. It was. And it was a really super lucky promotion for me. I was 25 or in my mid 20s and I happened to get that assignment. And, you know, at the time, I think Walmart was the it was the single largest volume account across the U.S. And it was merely probably half the size of it today. But at that time, it was the largest. And, you know, it's really unique dealing with a retailer of that scale. But for me, it was an opportunity that the really neat part about the job was the CEO at the time of Philip Morris had a leadership account model where he assigned all the VPs in the company account. And he happened to personally take Walmart. So I had a chance at the ripe age of 25 to be sitting in the room with the CEO of Philip Morris and the CEO of Walmart, who was least got at the time. And doing that three or four times a year was just instrumental in my career growth. So it was a super learning experience. I'll tell you, it's not necessarily the easiest account to execute in and many across the CPG space would tell you that. But it was a fantastic learning experience for me. And hopefully we'll see ourself in Walmart one of these days. That would be amazing. I mean, Walmart is as big as it gets for retailers. Now, one of the questions that I have, and I know I'm sure all of the investors that are watching right now, we've got 84 watching right now on all of our social media that are watching a stream right now, are probably wondering, since you've become the CEO for the last couple months, what is the one thing that investors don't know, but you think they should know about tech global alternatives? Well, if it was three weeks ago, I would have told you the results we had in Speedymark. And I think what that's shown that, you know, the hard thing about this space we're talking about consumers, you know, in this space that are super loyal, which means getting them to switch is hard. The good news, though, is once they switch, they're also equally loyal to what they switch to. And what we have found in our home market out here in Vegas is that when we get wide scale distribution and combine that with localized marketing, that we can move the consumer through the adoption funnel of making them aware of the product, having them try it and then convert permanently. And we're starting to see that here in Vegas. We're starting to see that in other places. And I think the future is pretty bright if these early signs continue going forward. Now, do you mind if I ask you a few questions from the audience? Absolutely. Perfect. OK, so if anyone has any questions, please put it in the chat. I'll do my best to ask those questions that you might have. We have a lot that have been coming through here, so I'm just going to try to go through them and and hopefully you can just give us your best possible answer. All right, so let's start with OK, Frogzilla, congrats, Mike, on being the new CEO is testing its products versus tobacco products for health benefits. And when might these tests be completed? Also, are you testing CBD and its effects on nicotine withdrawal? Thanks for the question. This is an area that I'm super passionate about. And as I mentioned earlier, this was something I'm so glad that the company listened to me and others on the advisory board to start investing in the science of our product, right? You can't be a credible person in the harm reduction conversation without understanding the science of your own product. So I can't go too much farther beyond what we've already published in terms of the studies that we've done but I can tell you we're on the right track and there's more that we're going to do. That's an important thing for me. In terms of running the company, I mentioned coming back to the UK. One of the reasons I think the UK market is such a strategical market for us is is where that government has been. It's this specifically around e-vapor and its role in the potential for harm for harm reduction. So having the science behind our product and having the credibility of third party labs that have done this work I think is going to be super important for our future, but it will also help shape future product development as we move forward as well. I have a question from Sandra. Why hasn't the AdCo homepage been registered yet or redesigned yet? It would be nice to see TAT there. Any ideas or any plans to have TAT be on there? That's a that's a good point. Thanks for highlighting that. We've got we've been working here in the last couple of months as we've really been focused on the Las Vegas market. And we're now really really looking at all of our digital platforms and be assured that they will all have a fresh look going forward. Fantastic. Yeah, one thing I can tell you about the investors is they're very passionate about TAT and they know a lot about this product. Sandra has got a bunch of questions. We'll just continue with hers. When will the Basemat be available to roll on your own? Is this in the planning stage? Sorry, you broke up on that one. When will the Basemat be available to roll on your own? Is this in the planning stage? Right now, you know, we have the three products that are already in a finished form. That's an interesting idea for us to consider. You know, one of the markets I ran for PMI was was the Scandinavian market and Norway and countries like Holland being able to roll your roll your own products is is popular. That segment we haven't looked at aggressively, but that's an interesting idea for us to consider as we go forward. Thank you very much. Next question is is version three the final version or is TAT planning on more improvements? Well, we're we're not here to be a one product company. The versions we have in the market today we feel really good about. But, you know, for us to be successful going for we're going to need to have a wider portfolio of products and trust that our R&D teams are working on those. And, you know, the innovation in this in this space is important. But where we are today is it's important that we build a strong foothold on the three products we have and that once we've built the scale for those products, introducing new products into the market will be significantly easier. Thank you very much. And the next question, will the idea with the plan displays on the highways be followed up? I think the reference there is the billboards. Yes. Right now, we're not really evaluating billboards. There's a question we have in our heads about the real return on investment they bring one of the things that we are doing that's that's fully public is we are on the radio out here in Vegas and we have found that has really helped us in terms of identifying that local marketing audience. And we think that's a better effect of our of our spend from a resource allocation point of view. And you couple that with a lot of the work we're doing in nightlife and building our databases to be able to interact with consumers one on one. We think those three or four things we're doing right there is generates a much higher return for us than just a billboard here here and there on in a city. Thank you very much. We have a hundred and fifty four people now on the stream. Next question Sandra is hitting us. When will TAT zero and heat hot burn be introduced. So you know that we've come out publicly on a project zero and that's a project that we are working on. No timetables here today to announce in terms of commercializing those. Like I said earlier as a company of our size it's important we have focus. And like I've said geographically we have focused markets in our first priority for us to be successful long term as a company is to be able to build a company that has national infrastructure scale products. Once we've done that hard work taking other products and running it through that infrastructure will be substantially easier. So for the next foreseeable future we're focused on building that infrastructure so that we have national scale and potentially even global scale in countries like the UK and others in Europe. But right now we're focused on building that infrastructure to be able to launch tap across the U.S. And then once we have tapped across the U.S. we'll turn our attention to other products. Very good. And are there any supply problems right now for example like packaging materials and when are the revised boxes with the correct information on CBD and THC available? So we you know if you really think about it this business was built during covid right. So whatever challenges are out there it's not new for us. It's just it's almost like standard operating procedures. So but at the moment we've not faced any significant supply chain hurdles you know the things I've referenced in Europe are more to do with importation and duties and things like that. But in terms of the raw manufacturing we've we've not had any interruptions to date at least that I know of it the three months I've been here and as it relates to the packaging we've got a project that we are working on to that will address the questions your audience raised. Thank you very much. This is from Frogzilla. He says Mike Tatt sales team did very well at the 7-Eleven FOA event in Southern California signing over 87 stores. Joe said Tatt was going to four FOA events in Chicago, North Carolina, Vegas and Arizona. Any updates on that? Well you know the FOAs for those in your audience that that's referring to 7-Eleven franchise owners. And you know that's one of the things that makes 7-Eleven a challenge to execute in right it's even though it's a corporate banner it really operates more like a mom and pop. So where we're focused on right now the the others market you know a couple months ago I referenced we would be focused on a couple markets. Obviously Las Vegas our home market has been one. The other market that we've shifted our attention to is the San Diego market. That's a market the team here knows really well. It's one where we already had good sales and distribution infrastructure. And there I know we have some key meetings coming up in the next months and hopefully we'll have some good news to report then. Very good. This is also from Sandra. Does Tatt envision becoming vertically integrated as sales expand domestically and internationally and would Tatt purchase a grower or look to start their own growing operation? Um you know it's interesting where I thought the question was going to go in a little different place when you said vertical integration. You know typically you don't see large scale CPG companies owning the agricultural element in the supply chain. You know I used to always kind of joke like Kellogg's does not own cornfields. And Philip Morris doesn't own tobacco fields. It doesn't mean we don't need to have expertise and understanding of that that's just typically not part of the value chain where it's profitable and the best return on investment. That said I mean I think there are other elements in the value chain like manufacturing and other elements that were constantly under evaluation. And you know it's like for those who are in business school it's always when do you build that next factory in a war game exercise. And that's those scenarios the team's already working on of forecasting into the future what will be our supply needs and rest assured we'll be prepared for that. It's typically something that you tend to have to invest ahead of the curve. And I think with the data we're starting to see in some of the markets like I've already referenced we'll be able to get have a good predictor of that. The good news in this space though is and these are conversations we had last week. There is a lot of capacity from from a cigarette manufacturing point of view across the globe. So there's a there's a lot of solutions out out there for us whether we want to continue using third parties or we want to do it ourselves and we'll evaluate all those options and do what's best for the company and the shareholders. That's very good because you're actually leading into my next question from Sandra Sandra's on point here. What is your current production capacity. We have plenty of capacity to meet our needs for the near future. We're not at a supply chain where I mean you know hopefully we start to have supply constraint problems you know a year 18 months from now and those will be great problems for us to have. But you know our team is part of building that three year plan. We've already forecasted what we think our needs are and when we'll need to invest in additional manufacturing capacity. So we're well prepared for that when it comes. Due to the increase in raw material prices is that aiming to increase the price of the cigarettes. And if so when. Well one I think it's important we don't call these cigarettes. We call them tax and that's a and that's very specific. But pricing is an important element for us. Right now we're trying to price the products right below the branded discounts here in the state. So for example in Bucky's you've a reference earlier. We're selling for five dollars whereas you're leading a brand sell for a couple dollars more than that. And that's because we want to accelerate trial and adoption and we don't want price to be taken off the table. Our margins are terrific. Our trade partners margins are terrific which is one of the win-win scenarios that the trade likes us for. So you know I think the price point we're selling at today is a nice sweet spot course. I think one probably hidden thing that your audience may not know is unlike other consumer packaged goods companies. There's two to four price increases in the cigarette space every year. And I can't think of another CPG category that has that. So if you think about the long term potential for a company like TAT you know even though we're selling at an extremely attractive place today with the cigarette companies around us increasing prices at a minimum twice a year and in some cases four times a year that gives us tremendous pricing power into the future. So when you think about fundamentals around like margin expansion I couldn't think of a better place to be. This is from Frogzilla Speedy Martin News mentions Texas and San Diego as key markets moving forward. Is TAT tackling San Diego because it might ban menthol like Los Angeles. BNB Beyond is TAT talking to Maverick and STMA. Well I can't reveal all the conversations we're out but definitely San Diego for me is a is a really important market. I mean we all know this that trends start on the on the coast and move their way to the center of the country. So tackling the California market and specifically San Diego right now is a is a really important one. You mentioned Texas. Yes. Texas is a priority for us. We're in midst of various conversations right now. You know in many cases it's hard for our sales team to keep up because we're still small and we're building out that sales team. And in fact many of the meetings I had this week while I'm out in Vegas is specifically around our hiring needs for the future and our ability to because it's not only getting the key account to buy in it's then also making sure we can execute our store level. And while Bucky's did a great job for us and they had their own internal team to do it most accounts don't. So we're right now looking at all those hiring needs for us as we go state by state across the U.S. and and there'll be more to come in that in the coming months and quarters. Very very good. Patents patents pens. What are they covering and when are you expecting them. Any updates on the parents you guys are working on. So we have we have to and I think this is a question we get routinely and I wish I could manage the time allocation for those in the patent office. But our goal is that we have some news to report on those two before the end of the year. And I have a weekly meeting with our R&D teams and our legal teams to evaluate other ways we can protect our IP. And that's something we will do aggressively. Any updates on the NASDAQ listing I know that we've we've heard about it a lot. Any updates or ideas when that might come to fruition. You know the markets are a tough place these days right. So you know those are you know my first priorities were coming in and really building out the growth plan and making sure that can accelerate. And if we do the things that are right there there will clearly be an opportunity for us to uplist to a to a larger extent in our future. Very good. There's another question here. It's just kind of like a more statement. Tat website needs a makeover. All options to buy Tat should be on one page. The in-home subscription link says Tat's membership confusing. Please fix store locator. It should be accurate. Just a just a comment I think there. All fair points from the audience. Thank you for the feedback and they are being addressed. Question about tomorrow's event. Obviously you guys are going to be announcing you're doing a full announcement on your earnings tomorrow. Some questions. I know you can't really tell us in advance but is that something that everyone should tune into. Should you know are you expecting good results. Is there anything you can tell us about that tomorrow. Well you know as I promised when I took over. Operating transparently with all shareholders is a value that's really important to me. And establishing these quarterly calls with investors to share results on how we performed during the quarter. Is is a is a is a milestone for us as we mature as a company. I think tomorrow's call is one that people should call into. If you're a shareholder today or you were a former shareholder I think you'll find the the the call intriguing. You know it's the first quarter that we'll be able to include adco as part of our revenue. So that by itself is a pretty big milestone for the company and we'll be sharing some other things on. That has happened in the quarter and maybe some forward looking comments about what the future entails as well. All right so I'm getting a whole bunch of questions guys I'm going to just try to keep it to the the ones that are not like overlapping some of the stuff that we've asked. How will you finance future growth by a shareholder dilution or taking debt. Any ideas of how you guys plan to raise capital in the future. Can you touch on that a little bit. Yeah so I think in our last call we address this question we don't have any current plans at the moment. One of the beauties about the product space we operate in you know it's a it's a hugely profitable you know the gross margins on our profit are really terrific so you know a large chunk of the business can be funded by itself and and but then the question comes to how fast we want to ramp it up and I think once we once we've got the data from a few more markets you know we'll evaluate that and decide what's in the best interest is all shareholders you know raising money's not an easy task and it's not something we take lightly so but you know right now I think we're in a good spot where we sit today and you know we'll see how that evolves in the coming months. Okay great. This is from Frogzilla how much does TAT roughly pay for hemp biomass per pound? Any idea? Yeah that's a proprietary I'm sorry I'm going to dodge that question. Yeah no totally understood. This is from Frogzilla very important will TAT have gift certificates in the future to be able to gift a carton or even a six month in home delivery subscription for the holidays or birthdays would sell very very very well. Any ideas? That's a great idea I might pass that on to our marketing team. Very good and this is from Mike is TAT currently working towards a TSX listing if so what timeline would we expect? Well I think I answered that earlier in terms of absolutely we would aspire to be on a larger exchange and when the time is right for that we will make that move. Perfect and okay let's see. Any more questions? There is a statement from 93.1 the mountain love listening to it I heard the radio and hearing the TAT commercials so apparently people are liking those commercials so that's going very well. And all of our employees have got really great feedback out here in Vegas that the radio ads are clearly being heard and I think the results of Speedy Mark show that they're also being effective. What is your path to sell TAT in high volume? Anything you can share with us as far as your strategy as the CEO? I think I've answered that right I mean I you know we hired IRI to help us being a small company you know we needed help so from some folks on the outside who really had the hard data. You know the United States is a big place right I mean it's 50 states and you know we've broken that down into different segments of states we will focus and you know the three I've talked about right now or it is where the company's attention will be but you know we clearly want to have national scale and we're going to do that state by state and I think at some point we'll create a tipping point that you know hopefully we're in all 50 states but right now we're focused on the three that I've referenced and plus a couple others and when we have more news on that obviously we'll report it but you know this is going to be something that you know we have to do the hard blocking and tackling to build TAT and then exciting is once we've built that infrastructure across the US there's more products that can run through that infrastructure. All right I'm only going to ask one more question because I know you're busy and there's a whole bunch coming at me but I want to just kind of really stay focused on where we're at. This is from Frogzilla Frogzilla thank you for all your questions thank you everyone for all your questions. Have you ever considered prizes and packs like Willy Wonka in the Chaka Faction? That would be one that you know for my 25 years in the space but listen trust when we go through our marketing brainstorming ideas I mean I love the feedback from our from our shareholder base I love the feedback we get from consumers so keep the ideas coming because you know even though we've got good people here on the ground always it's always great to get another idea but trust when we get in the room we're throwing everything up on the white board of what are the all the possible things we can do and then we evaluate them based on what we think will have the highest ROI so definitely I think things like sweepstakes promotions and things like that are in our future but we've got to have the scale then to so those will have an impact. 100% and just one more question how many stores is tied in right now? Do you know that number? Would you guys? Because it's difficult to keep track on the store locator so some of the members are asking if you have that and that's one of the hard parts about the convenience or space being it's so mom and pop keeping that up to date is is a sheer challenge that's why we focused on some of these anchor accounts which is where we really can direct the consumers to but the whole website is under review right now and hopefully I'll have a fresher look in the months to come. One more question. What is your number one asset that will take the company from a startup to a market contender? What would you say? I think it has to start with the product. Right. I mean we can sit here and do all the best marketing and sales tricks around the planet. But if it's not a good product I mean you're not going to be able to get people to adopt it right. So I think it starts there is if you make really great products and then you package them appropriately and market them appropriately you can you can create love with the consumer and that's what we're trying to do right now but it starts with a great product and and one of the things that we're going to be investing in going forward is being able to get that feedback from the consumer through the product development phase so that potentially we don't have to go through the learnings that we did through version one two and three right. We're going to be able to do that through private panels where we established and get that feedback so that we don't have to go to market with something that is anything less than ideal. But when we do that's the great part about our business so you know having the ad codes part of our business once we do then we can drop it into all the stores that ad code distributes to and get that real world feedback. So we're excited about that and and you know there's going to be more to come from an R&D point of view going forward. Oh one more question because I keep getting it would TAT consider purchasing property just south of the Canadian border near Christina Lake BC. You know I'm a CEO that comes to it comes to it from the point of view of all options are on the table. It's just a bad practice in my view to say no to anything off the bat. So you know whether that's product development whether that's marketing ideas whether it's M&A activity all options for me are always on the table. And we'll evaluate those and what's in the best interest to shareholder. So if there's a point in time that makes sense for us we'll evaluate it and do it. And if it doesn't make sense we won't do it. Love it. Thank you so much for your time today Michael. If there was one thing or statement or something you want to leave the investors we've got 173 people here right now watching. If there was something you want to leave everybody with today a statement comment an idea what would it be. I'll give you our little our little tagline we say here in the office. Tritag by Tat. Love it. Thank you so much. Pleasure meeting you to a meeting you today. Michael Saxon wish you the best of luck in your future endeavors. The new CEO of Tat Global Alternatives. Thank you for joining us the first time here on Rich TV Live. Hopefully we can do this again many times in the future and we can continue to talk about everything that's happening as it happens. And thank you for joining us today Michael. Yeah thanks Rich and thank you for your audience for being fans of Tat. Always a pleasure. Thank you guys for watching. You're not winning. You're probably not watching. We bring you the winners. We bring you the news. CEO interviews. Analysis. We'd love to bring it to you first. Hopefully you enjoyed the session. Hopefully you enjoyed the show. If you like the video smash the like button. Comment down below. Share the video everywhere and subscribe. If you have any questions that we haven't addressed or answered please put it in the description of the video. I'll do my best to send that over to Michael and we'll try to do our best to answer those in future videos or future interviews. Thank you guys so much for your time. Michael have a great day. Continue all your hard work and we'll be watching very closely tomorrow for the earning call and thank you for watching everybody and Michael have a great day. Thanks Rich. Cheers. Thank you everyone. Have a nice day. This is Rich from Rich to Be Live saying have a nice day. We'll see you soon.


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