to come back to whether this thing really is global. So what this is about is, as you may have heard, you may know a fair bit about it, there is currently really quite dramatic movement in the area of international corporate taxation. And so really after, as you probably know, the current system of international corporate taxation, based on the principle of arms pricing and so on, really goes back to the 1920s, if not further. So for about 100 years, there hasn't really been much change in the basic structure of the international corporate tax regime. But now suddenly, really over the last couple of years, two or three years, we've had really rapid change, we have the prospect of really rapid change to a new system that really departs from the long established norms of that system we've had for 120 years. So, and as I'll explain, you know, you often read in the press that this is a historic agreement and blah, blah, blah. And you might think, well, that's just journalists as usually trying to make things more important than they are. But in this case, excuse me, in this case, no, it really is a big, it really is a big deal. So to set the scene, what we had last October was agreements at a political level on a reform of the international corporate tax system, amongst something called the inclusive framework, many of you may know about that, which is a grouping brought together by OECD and G20. And this agreement now covers, I'm not quite sure exactly how many, but about 140, 140 countries. So that's a lot of countries, it's not the whole world by any means, but it's a lot of countries. And so what did they actually agree on? And as I say, it's a political agreement, not yet signed and sealed and delivered. But the political agreement has two elements, what are called two pillars.  And it uses a formula to reallocate part of the profits of the very largest multinationals, the very largest ones we're talking about here, to market countries, countries, meaning countries, sometimes called destination countries, countries in which final sales take place. So that really steps back from this whole principle of two of the key principles under the of the 1920s corporate tax system. One system, one principle was that we allocate profits by arms length pricing. That is we try and figure out what prices transactions within multinationals would have occurred at, had those had there occurred between independent parties. So one, one core principle of the old system has been arms length pricing. That's how we allocate profits across the bits of a multinational. Another principle has been that, well, if you simply export to a country, you don't have a physical presence there, you simply export to a country. Then under the 1920 system, you're not going to have any liability to corporate tax there. Of course, you may have liability to VAT and so on, but you wouldn't have a liability to corporate tax. Pillar one basically introduces these two principles which are quite different. One is we're allocating part of profits not by arms length pricing, but by a kind of mechanical formula. So we share the profits out according to some mechanical formula. And also, the largest, very largest multinationals have some liability tax simply if they export to a country without having any real physical or legal presence there. So pillar one, okay, you can see that's already stepping back from these core principles that we've had for a hundred years. Pillar two, which is the one that we're going to be concerned about. What does this do? This is, this establishes for the, for the largest multinationals, not the very largest, not only the very largest who are subject to pillar one, but the kind of next level down of big multinationals, establishes a minimum 15% rate of profit taxation. So again, this is something we've never had. We've had, you probably know that there has been a lot of talk about introducing minimum corporate tax rates over the years, internationally agreed minimum corporate tax rates. There are the only examples really, I think, are in WAMU and CMEK. But now this, the idea is that everybody will do this. Everybody will have a minimum effective rate of profit taxation of 15%. And that's pillar two, that's the one we're going to be talking about. So these are really big reforps. This is not, this is not small stuff. That's why I say this really is a historic agreement. It's historic, it's momentous, it's important, maybe not so much in terms of the sums of money that are involved at this point. We'll come back to that because a lot of the core system does remain in place. So it's not, it's not overturning quite everything, but it's certainly introducing fundamentally new principles. But even if it's not quantitatively a huge thing, I think it's a significant thing, but nonetheless, maybe not huge, but conceptually and intellectually, it really is clearly the most important development for at least 100 years in corporate taxation in general, one could argue. So what, as I say, we're going to focus on pillar two, the minimum corporate tax, excuse me, and with some focus too on what it means, in particular for low income countries. So before that, I should just say that while there is this high level political agreement, it hasn't yet been sort of agreed, you know, signed, sealed and delivered. There are still issues, there are issues in the EU. So it's possible that some of this, well probably no one's, no one's ever going to say it's not going to happen, but it might get pushed off for a long time. But nonetheless, let's proceed on the assumption that this is going to happen according to the schedule that has been laid down so far. Okay, so we're focusing on pillar two. Well, what is the point of pillar two? Why might one want to have a minimum effective rate of corporate taxation? Well, you know, the arguments that are given often depend on who they're being given to, who is the target for persuasion, but we can identify, I think, two kind of clear main objectives. One has been to limit tax competition, this sense that corporate tax rates, effective corporate tax rates around the world have been subject to kind of huge downward pressure over the last, since the kind of early 1990s, and that, you know, this has had the effect of essentially the world's governments shooting themselves in the foot, basically by losing revenue, as well as perhaps some equity concerns, but clearly revenue has been a major motivation here. So the idea is partly that if you set a minimum corporate tax rate, at least you're setting some kind of flaw on where corporate tax competition can end up. So that would be motive A. Motive B is to kind of limit the artificial shifting of profits from one jurisdiction to another, because clearly what happens is multinationals try to shift profits from where the tax rate's high to where it's low. So if you can raise the low rate, you can expect to limit the extent of profit shifting. Well, why might one want to do that? Well, to some extent, some people may see that as an aim in itself, as an end in itself, because they, there's this mantra of taxing, essentially taxing businesses where they add value, so to somehow tie tax payments to where real activities take place. I think that's more of a slogan than something one could achieve in reality with great precision. But nonetheless, some people, I think, see that as an end in itself. But even if it's not an end in itself limiting profit shifting, then we can certainly believe that if profit shifting becomes less attractive, then that will feed into objective A. That will make it less attractive for countries to cut their tax rates to attract shifted profits. And it'll make it less necessary for higher tax countries to lower their rates in order to protect themselves against profit shifting. Excuse me. So those, I think, have been the two motives that are most often mentioned. I think there is another objective that is sometimes mentioned, and that is to alleviate distortions to investment, to try and make sure that when multinationals are figuring out where to invest across the world, those decisions are less prone to be influenced by tax considerations. That is, it's kind of an efficiency concern. We, in the absence of any reason to want otherwise, we might want investment to occur wherever it's most efficient for it to occur. And we don't want taxes to distort those decisions, because otherwise we end up with less output collectively than we otherwise could have. However, there is a bit of attention in some of these, in some of this discussion, which is worth pointing out, which is on the one hand, there's clearly a desire to ultimately to raise average effective tax rates. That's really what you're doing when you're thinking about a minimum tax rate, you're trying to raise average effective tax rates. At the same time, when we think about distortions to investments, including kind of investment within countries, well, what would we think about there? We think that we, well, why would raising average tax rates actually reduce distortions to investment? It's not at all clear that it would. What you want to do in order to reduce distortions for investments, imagine kind of investment within countries now, is you want to have a low marginal effective tax rate, because we know the marginal effective tax rate is the thing that drives actual investment levels. And we know also that we can have taxes with high average tax rates, but low marginal average tax rates, if we try and attract tax rents, that is excess profits. So really in some sense, what we ought to be trying to do in all this, it seems to me, is finding ways in which the world as a whole can raise average effective tax rates, but have marginal effective tax rates close to zero, or at least leave countries with a way in which they can set low marginal effective tax rates while meeting whatever the kind of degree target is for average effective tax rates. Excuse me. So I'm not going to go into this in great detail, but I think when you think about this minimum tax, and in fact, when you think about this wider project in relation to tax avoidance that the OECD and G20 have been engaged on, something called the base erosion and profit shifting project, the BEPS project, many of you will know about. When we think about all that, in some sense, the standard we should be using, it seems to me, to judge that is, well, is this succeeding in raising average effective tax rates while lowering, or at least leaving countries free to lower, marginal effective tax rates? And as I say, I won't particularly linger on this, but I think there's kind of scope for a critique of the BEPS project in general, and the minimum tax, the approach to minimum taxation in particular. Anyway, those are the kind of some of the objectives, and clearly we're going to have to really think about, well, do we think the minimum tax as proposed will actually achieve all this? So let me, having sort of given the context, let me just give you a quick outline of what I'll be talking about. Well, first of all, I'm going to talk about what are the mechanics of Pillar 2? How does it actually work? Oh, excuse me. And that'll take a bit of time because it's actually more complicated than you might think. The idea that we're all going to have a minimum 50, we're all going to have an effective corporate tax rate of 50%, that may sound pretty straightforward, but as we'll see, the mechanics are more involved than that in ways that may well influence the impact of the minimum tax. And then that's what I'm going to focus on in the rest of the talk, is the impact of the minimum tax. And I'll talk about impact on profit shifting, tax revenue, investment, and then spend a little bit more time. I'll talk about those fairly briefly, but then spend a bit more time talking about what the minimum tax might mean for tax competition. They're just a few words of conclusion. Okay, so let me head on. So how does it work? Well, okay. I'm going to take a drink of water before we start this because you have to be focused to get all this right. So one thing to bear in mind is it doesn't apply to all multinationals, only the kind of ones that are sufficiently big, and big in the sense that basically their group revenue, the multinational as a whole, of about 750 million euros a year. So quite big, but not the very, not just the very biggest. And so then what you do, so you brought, you've defined all these multinational groups that are in scope. And then you look at each entity within that multinational group, each subsidiary, whatever it is, and every such entity is going to be liable potentially to what's called a top up tax to bring it up to this 15%. So how does the top up tax work? Well, that's what equation one is saying. So if you look at the first brackets, first bracketed term, T is what's called in the jargon covered taxes. But for the moment, just think about as the corporate tax that the entity actually pays. So big T is the corporate tax the entity actually pays. P is its accounting profit. So T over P is the actual corporate tax rate, actual corporate tax as a proportion of accounting profit. Okay, so that's in some sense the effective rate that the entity actually pays under the domestic tax system. Well, so what that first bracket does is says we're going to bring if that T over P is less than 15%, we're going to charge a top up tax to bring total tax up to 15%. So 15% minus the effective rate of domestic corporate taxation. That's the kind of the rate that we're going to apply. The thing that gets a bit more complicated is what is the base to which we're going to apply that top up? Well, it's not quite accounting profit P alone. Because in calculating the base, what we do is we take the accounting profit, and we deduct from it an amount big C, which is called the carvert. The jargon is the substance based income exclusion, but popularly known as a carvert. And the carvert is some fixed proportion of the entity's payroll and tangible assets. So the disproportion is just laid down in the rules. So P minus C, the base of the tax is accounting profit less some fixed proportion of your payroll and tangible assets. So what you can see is we apply the top up at the rate of 15% minus the actual effective rate, not to accounting profit, but to what is generally now called excess profit, that is profit in excess of the carvert. So that's quite an important little formula to bear in mind. And to note that because of this C, the carvert, it's not quite as simple as saying we're going to top up, we're going to make sure everybody pays 15% on accounting profit. It's there's some allowance for the carvert. And I think there's some, the kind of rationale often given for that is that, well, we want to allow some kind of tax break insofar as there are kind of substantial activities going on. We can talk later about whether that makes sense. I have a little remark about it in a minute, but there's some notion that, well, when there's substantial activity going on, maybe we don't really want to bring all profits up to the 15% tax. So formula one is important to bear in mind and we'll come back to it. A couple of other points just to mention. When I introduced that term, Big T, I said that was what's called covered taxes, covered, taxes covered by the agreement that means. So that in price is mainly going to be corporate income tax, but there are other things that might be included. For example, if there are special resource rent taxes in the extractive industries, then my understanding is that even though they're not in some sense of corporate income tax, they would be included in that amount. What's not so clear is, for example, whether things like royalties in the extractive sector or in other sectors, whether they would be counted as covered taxes or not. And you can see that may make quite a difference to the country concerned whether all these taxes are going to be essentially included as covered taxes. Because if they're included as covered taxes, that reduces the top up tax applied. One other thing is that the T, the Big T may also differ from, I said, I put in mind, your mind's the idea that T was the actual taxes paid. That's basically true except for some cases in which there are timing differences involved that might give rise to some kind of oddities in the application of this rule. For example, if you have accelerated depreciation and there are some adjustments made for that, which I'll come back to later. So here we have entity by entity. We apply this top up. We see if this top up tax is required or not. And strictly, it's not quite every entity. It's across every entity in the same multinational group within a particular country. So if a multinational group has two or three entities active in a particular country, this is done for the sum of those. But basically I'm going to talk about this as being levied at entity level. So notice too, this is not to do with the national, some kind of national effective tax rate. Everything is defined at entity level. Okay, so what does that mean? Well, that slide, oops, hang on, sorry. So that slide is just the top up tax, just the top up tax that someone is going to apply if the rate T over P is less than 15%. But of course, that's that top up tax, sorry, that top up tax is levied on top of the domestic tax. So if you think about the total tax that an entity pays in a country, it's going to be the top up tax plus the domestic, the kind of normal, regular domestic corporate tax. So the total tax is what's in that first line there. So T is just the tax you pay under the regular domestic tax. And then the second term is the top up tax exactly from the screen before. So two elements, domestic tax and then any top up. Now if you have gone a bit funny here with my slide, I'm afraid, but if you look at that first equation, you can simplify it based by collecting terms in T. And it turns out to be the same thing as what I for some reason called the label second. So the total tax, this is the total tax that the entity pays is comprised of two things. One, you take the effective rate, effective domestic rate, the T over P, and you apply that to the amount of the carve out. So the carve out ends up being taxed at the rate T over P. Essentially, because it's being excluded from the minimum, that's the that's the way it gets it effectively gets taxed. In addition, you have the second term, which is 15% of P minus C 15% of that excess profit term. So again, this is going to be quite helpful to bear in mind, because what does it tell us? Well, okay, so the minimum tax as we have it in that tasteful brown color, the minimal minimum tax is equivalent to having in terms of the total tax the entity faces, it's equivalent to taxing the carve out at the rate T over P, plus a minimum tax, this is the second term is really the true minimum tax, which is 15% of excess profit. Why do I say that's the absolute minimum tax minimum, minimum ish tax the ish I'll come back to. Well, because if you look at those two expressions, those two terms, the first one, the country could make zero if it wants to by setting T to zero. But there's nothing it can do about that second term, that second term is beyond the country's control, you know, barring games on defining P or defining C, there's nothing the country the country can do to affect that second term, it's just 15% of whatever accounting profit is with it with the ups with an accounting profit, whatever that is, less this mechanical car that whatever that is. So there are kind of no games to play on that second term. So that's why I say that the second term there is really like an absolute minimum, it's going to be really hard to get the tax that the entity pays below that. There may be one way of doing it, but that's pretty strange. And so that's that's why I say that's the absolute that's the absolute minimum. One other point that I think is quite interesting is again, if you look at that second term, it's excess profit. Well, it actually looks almost like a little bit like a rent tax. So rent tax, as you probably know, is a tax where essentially you allow all costs in effect to be deductible in calculating liability, including any financial costs. So for example, if you made C, if the if the carve out approximated the essentially the cost of the capital for the for the company, the cost of capital times its capital employment, then P minus C would basically be as pure profits. So that minimum would actually be like a rent tax, which has this nice property that you've probably come across that the rent tax basically has a as high an average rate as you want. In this case, it would have an average rate of 15%, but it would have a marginal effective rate of zero. So I don't think that was necessarily designed deliberately in probably rather suspect it wasn't a deliberate feature in designing the minimum. But it's potentially quite an interesting one as a way in which you could actually combine a minimum with a with the high average rate and a low marginal effective rate. Okay, so I hope that's kind of those are the kind of key mechanics. And you can see that, you know, as I was explaining, it's a little bit more, it's more complicated than simply 15% of a county profit because of that carve out. You know, if that carve out to zero, then tax is just 15% of accounting profit. But when C isn't zero, life is life is a bit more complicated. Okay. So what can we say about this? Well, another thing we should talk about is, well, actually, who gets the money from the top up tax? So someone is so I haven't said anything about who gets the money from that top up tax. And that has been really quite a big issue, as you can imagine, in the kind of political process of reaching agreement, particularly with a worry that really the source kind of developing countries, which typically going to be the source countries where the income arises. The concern was that they would be very much disadvantaged by the proposed, the what was called the rule order that was proposed rule order mean meaning who gets to have a go at the money in which order. So here are what the kind of most recent version of the proposed rules look like. Well, they actually give priority to the parent country to the parent side, the residence country, however you want to put it, under what's called an income inclusion rule, the IIR. Basically, that says that if the effective rate is less than 15%, then it's going to be the residence country, the parent country that imposes the top up. And that's a little bit like something called guilty that emerged from the to us tax reform of 2017. However, the second bullet. One very striking development very late in the process was that the model, the rules are now anticipated to include a way in which the host country, the source country can actually preempt the residence country by applying itself, what is called a qualifying domestic minimum top up tax, the QDM TT. So that's a terrible acronym. OECD is usually very good at acronyms, but that's an incredibly bad one.  What do you want to do?  So as a host country, do you want to sit back and let the residence country get the money from the top up tax? Well, no, you don't. You want to get the money. And the way you get the money is by applying the qualified domestic minimum top up tax. Clearly, the investor doesn't care. The investor really doesn't care who they pay the money to. They care about the total tax. So if you're if you're a source country, then you pretty much want to apply this qualified domestic minimum top up tax. There's a very kind of clear policy prescription that comes out of this.  And we say, well, actually, I don't really like this minimum thing at all. I'm just going to stay out of it. Well, unfortunately, in a way, you can't because if you stay outside. Well, the residence parent country is still going to impose their income inclusion rule. That's that's their role. That's nothing. It's not your role. They can they can do what they want on their entities. So basically, if you stay outside, either you're going to be conceding revenue to the participating capital exporters. Or well, maybe you're going to say, well, no, what I'll do is I'll set my tax rate high enough that the minimum top up tax won't or won't apply. I'll get my money that way. Well, actually, if you work through the algebra, and I don't have time to do it now, if you work through the algebra, that actually means a higher average rate for investors than if you impose the if then if you were in the deal, in impose the qualified domestic minimum top up tax. So it's an it's a horrible acronym QDMTT, but it's a very important one, I think for for low income countries, and particularly for for source countries in general. There is in the model rules for perhaps proven for your pillar two also provisioned as something called an under text payments rule, which again would give money to the host country when the is not applied and then this is subject to tax rule. But I'm going to leave those aside in this talk because I think a lot of the work in all this is going to be done by the QDM TT. So I hope that makes sense. And we'll we'll come back to that. So yes, that's going to be quite important when we think about, for example, things like tax competition and the revenue impact of the reform. So let's then turn to what we think if that makes sense. I know it's difficult for you to ask questions at the moment, but if there are any, that's kind of the mechanics of the thing. If there are any burning questions, I'm sure we can find a way to get them to me. Otherwise, I'll just carry on. So as I said, going to be fairly brief on these three dimensions of impact profit shifting revenue investment. So first of all, maybe before we come to that, who is going to be affected by the pillar by pillar two? And the answer is basically everyone assuming it happens and assuming critically that it's agreed by the major capital exporting countries, basically by the by the big countries in the G7 G20, then pretty much everybody is going to be affected. Why is that?  Well, as we just discussed, if pillar two is adopted by the major capital exporters, there's no real, there's no real meaningful opportunity to opt out. If you just say, well, I'm not doing it, I'm keeping my rate below 15 percent. Well, the resident, the big capital exporters under the current as currently visited, we'll just say, oh, thank you very much. In that case, we'll impose the top up tax ourselves, we'll get all the revenue. Thank you very much. So they'll just apply their, their IIR, sorry, I keep getting IIR and IIR confused, but they'll apply the income inclusion role. So what is that? So let's introduce a few numbers here. So how many countries actually have effective tax rates below 15 percent? These are the effective, not statutory, these are the effective tax rates below 15 percent. And these numbers are from a recent UNTED study that I was involved in and references are at the end of the presentation, which I'm sure you'll get at some point. So actually about 33, about a third of all countries are below that level, which is kind of quite, quite a lot actually. Though again, that probably actually understates the importance of the rules because as we were saying, it's not the kind of overall effective rate at national level that matters. It's the rate entity by entity. And it could be that an entity in a high tax country has an effective rate below 15 percent because it has some tax incentive or something. So again, important to bear in mind that we often speak of countries being affected, being constrained by the minimum, but everything really operates at the entity level. Of course, if you think about investment hubs, that is countries that are largely used as the tax reasons, as conduits for investment, that is for treaty shopping or other reasons, investment is passed through these countries on its way to an ultimate destination. Well, a lot of those, 80 percent of those have effective rates below 15 percent. And they are clearly, I think, the target, largely the target of this reform. And about 30 percent of all developing countries would be in this category. And maybe a bit higher for reasons I'll come back to. So a lot of countries on the low tax side being affected. But what about higher tax countries? Say countries that aren't don't have national level effective rates below 15 percent. Well, they may be affected too. And for example, some of what UNTAD do is they look at, well, there's a lot of investment in developing countries where the effective tax rate is more than 15 percent. But a lot of those investments, it seems the profits get shifted to other jurisdictions, to other jurisdictions where the rates are less than 15 percent. So when you think on the basis of where does this investment located in a particular country, what is the effective rate on that investment, given the profits may be shifted to all other jurisdictions? Well, that may well turn out to be less than 15 percent. And clearly, then you can see that the minimum is going to be have an effect on those countries, because the rates on the profits that are shifted elsewhere is going to go up higher than 15 percent. And then even where that's not the case. I mean, even if you're in a 45 percent country, nothing strange going on, you're going to find that essentially profits are going to be less likely to be shifted abroad. And that makes investment in your country less attractive, because to some extent, investment in high tax countries is made more attractive by the possibility of shifting profits to lower tax countries. So even in those countries, there's going to be some effect. They're not directly constrained, but there's going to be some effect through the profit shifting channel. So it's going to be pretty hard to find examples of countries that are not going to be affected in one way or another by the minimum. So what do we think is going to happen to profit shifting? That is the artificial, the kind of artificial transactions that are intended to shift taxable profits from places where the rate is high to where the rate is low. Well, now what's going to happen is that if you want to shift profits to one of these investment hubs, for example, where the rate was previously below 15 percent, well, it's now going to be 15 percent. So there's going to be less gain from profit shifting. If you're in a 25 percent country, you're no longer able to shift it to a 10 percent country, because the 10 percent countries have to raise its rate from 10 to 15. Profit shifting is going to be less attractive, but clearly it's not going to end because if you're in a 25 percent country, okay, shifting to a 15 percent country isn't as good as shifting to a 10 percent country, but it's still good. So there's still an incentive to shift profit to lower tax jurisdictions. It's just that the profit shifting, the incentive is smaller. Profit shifting won't end, but it's clearly going to fall under these arrangements. So how much might it fall? Well, here's just a kind of a back of envelope calculation. I mean, people, when people model these things, they kind of often develop models in which it turns out that the amount of profit shifted, denoted P.S. here, is convex in the tax differential, that is kind of increases at an increasing rate with the tax differential between the two countries concerned that the high tax country, big T, low tax country, little t. So as a simple example of that, suppose the profit shifting is proportional to the square of that difference. It's some constant A, and it turns out A is not going to matter just as long as it's positive, times the tax difference squared. Well, then you can just run some kind of little back of envelope calculations to figure out how much profit shifting will fall. So for example, if the low tax rate, maybe imagine the little t is initially 8%, then profit shifting from a country with a rate of 25% is going to fall by 65% when that low tax country is forced to raise its rate from 8 to 15. So that actually seems kind of quite a bigger shift. So profit shifting doesn't disappear, but it falls by about 65%. And you can see by looking at it, you can see what essentially shapes how much profit shifting falls. So profit shifting will fall by more. The lower is the initial tax rate, initial low tax rate, because then it has to kind of move up more. And the closer is the high tax rate to 15%. So we can say, I think this is all back of envelope, but what they suggest to me at least is that these aren't, they're not small numbers. But they do nonetheless ignore the fact that, well, maybe some profit shifting may occur to higher than 15% countries. And maybe that will actually increase, maybe profit shifting to, if you're in a 25% country, maybe you're probably shifting profits to a 20% country. And maybe you'll shift more to a 20% country when you make the appropriate balance between shifting there and shifting to lower jurisdictions. Sorry, did I hear a possible question? Sorry. Well, I think it's some noise from outside. Oh, okay. Okay. Okay. So that's my take on, my very back of envelope take on profit shifting. What about revenue? So here there has been a fair bit of work done in those references you'll see at the bottom of the slide. Not surprisingly, total revenue tends to go up. And notice that revenue is going up here for two rather different reasons. It kind of goes up directly in countries that are forced to raise their effective rate. So kind of mechanically, assuming there's kind of no, assuming for the moment there's no response, revenue is going to go up because some country has to raise its rate from 8% to 15%. So there's a kind of a direct effect from where the constraint actually bites. But there's also going to be an indirect effect through this reduced profit shifting. So even in countries, as I was just trying to convince you, even in countries where the constraint isn't going to really bind at all directly because their rate is well above 25%, effectively profit shifting is going to go down. So there's going to be more profits remaining in higher tax countries. And that's going to mean a revenue increase. How big are these increases? Well, estimates range a fair bit, but from something like a bit under two to a bit under 6% of corporate tax revenue. For the EU, there's an increase of 15% for the affected multinationals. And that's a something I'll come back to. That's assuming that some of that revenue comes from the EU countries applying the top up tax elsewhere in the world. That is assuming that what I've got correct for once the IRR, IIR is applied by EU members. So that was we've seen, we might expect on the other hand that it would actually be the source countries would imply the QDNTT themselves. And for developing countries, this recent UNTED paper finds kind of at the high end, maybe a 15% increase in revenue from far related to foreign direct investment. So not total corporate tax, but revenue related to foreign direct investments. So, you know, the kind of noticeable revenue increases are not sort of transformative, but they're certainly noticeable. One thing that is quite striking is really the following. So that first bullet is all about the total increase in revenue, doesn't distinguish it in who gets it. But if we also question who actually gets this money, we might think that it's going to be important whether this QDNTT is in place. So how much developing countries are going to gain, we might think is going to depend on whether they impose the top up tax themselves or whether the top up tax is imposed by the residents country. But one of the striking findings in UNTED, still slightly mysterious, I think, is that actually that matters less than you might think. And that's because a lot of the effect comes not from this direct revenue impact of whether minimum constraint bites, but from the impact on profit shifting. So the story here is that a large part of the gain for developing countries comes from the fact that less profits are shifted out of developing countries to say investment hubs. And that that effect is about as important for developing countries as a whole as the kind of more direct effect from raising rates to 15%. So I think that's quite a striking finding, particularly given, as I say, all the political importance that was attached to this rule order issue before, whether it's the residents or the source country that tops up. It turns out, at least in the UNTED results, that that still matters, but it matters less than you might think. What about investment? What happens to investment? Well, let's think it through. So average effective rates, we would think certainly would go up, and they go up directly, work in countries that raise the minimum tax rate, and they go up indirectly in countries where this profit shifting channel is at work. They also are likely to become more compressed. That is, the bottom rates go up, the idea is the bottom rates go up, the top rates, let's say, remain the same. So things become more compressed. There's less dispersion among effective tax rates. What does that do? Well, that does two things. One, it's actually good for the high tax country. So the high tax country is kind of benefiting because it's kind of comparative disadvantage or competitive disadvantage has gone down. So for high tax countries, we might expect to gain through that route. And that, you might think, the second impact is while the reduced compression was likely to compression of rates likely means that taxes matter less for the choice of where to allocate investment. So that kind of cross country allocation of investment distortion, you might think, what we would think of in general, is likely to go down. There is a counter argument to that. There's a paper by Mike Devereux, which kind of argues a little bit the opposite. But the sort of the conventional wisdom, let me put it that way, is that this compression effect will be good for high tax countries and will likely improve the allocation of investment. Whether that's an improvement in allocation is a really big deal or not. Mike, you were cut off because we had an electricity issue here. I thought you just closed the lights up so you could have a good see. So luckily you're now back. So where do you want me to go back to? So that's where we're going to be here. So this is fine. But the investment you just started to explain and then you were cut off. Okay, I'll start again. And then roughly 15 minutes left will that be okay? Yeah. So in the first one, what are we things going to happen to investment? Well, I think we think that average effective rates are going to go up because total tax payments are going to go up. They're going to go up for these two reasons. They go up directly where countries are obliged or where the top up tax applies. They go up indirectly because even where the top up tax, even in jurisdiction countries where the top up tax doesn't apply, profit shifting will go down and therefore we'd expect rims go up. So average rates go up. They probably also become more compressed in the sense that you have the low tax rate country here, you have the high tax country here. You force the low tax country to raise its rate and that the gap between the two rates goes down. That's probably good for high tax countries wanting to attract investment because their competitive disadvantage has gone down. It may likely also means an improved allocation of investment across countries because tax is going to matter less for where to in the tax differences are much going to be less important in choosing where to where to invest. So an efficiency gain, although how large that is, we don't want to question. What about marginal rates? Well, we certainly think those will go up in all countries basically because opportunities for profit shifting go down. So essentially, investment everywhere becomes less attractive because profit shifting opportunities go down. The effects in directly affected countries are complex. Maybe I'm starting to run out of time, so let me not go into that. Let me just say that in principle, it's ambiguous as to where the marginal affected tax rates go up or down. Generally, I think people expect them to go up in which case we might expect investment to go down for that reason. So there is a sense, I think, that investment will go down and in aggregate may go up in some countries, may go up in higher tax countries and down in lower tax countries. A lot of the estimates put this as something like two to three percent change in investment as a consequence of the minimum. So again, not necessarily huge. But let me, I just wanted to say a little bit more about what happens with tax competition. As I mentioned, one of the objectives of the minimum tax has been to kind of put a bit of a slowdown on tax competition. So let's go through, go back to think about it from basic. So if you recall, this is exactly the same equation we had above, which is the total tax paid by an entity that is subject to the top-up tax. Remember those two terms, the TOP, the effective rate times carve out times 15 percent of excess profit. Now, so that's the tax paid total tax of an effect directly affected entity. Now, that if a country has a QDMTT in place so that it's applying the top-up, then that expression equation two is also the revenue that that country is getting. So imagine you're the low tax country. So that is the revenue you're getting in equation two. So what are you going to do? So you've already put a QDMTT in place. What are you going to do? Well, suppose, let's suppose it may not be a great idea, but suppose you want to compete in the intact terms to attract investment. Well, the best you can do is really set T, big T to zero. You can't go below 15 percent. That fifth, as I was saying, that 15 percent of excess profit, there's nothing you can do about that. With one footnote, I'll come back to it this time. So there is a floor, there's clearly a floor below which you can do, but you can still make your country more attractive by cutting T. There's still scope to attract to, if that's the game you want to play, attract investors by reducing tax payments T. Now, what you'll notice because the T over P multiplies C is that, well, now if you cut taxes by a dollar, that only benefits them. So T goes down by a dollar. That only benefits the investor by the ratio of the carvel to financial profits just through the mechanics of this thing. So a dollar cut in tax revenue benefits the investor less than it did when there was none of this top-up tax stuff. However, it now only costs you C over P. So cutting your taxes by a dollar is also less costly because you get some of it back through the QDNT. So arguably, you could say that the incentive to compete through tax reductions is unchanged. There's a floor, but it's still the case that through that first term, you can arrange more attractive terms for the investor than otherwise. But there are I think two further issues we should think about. So my first story is that really the incentive to compete on taxes doesn't really change much. There is just a floor and you only hit the floor by setting your domestic taxes to zero, but that's still true now. You only set the floor now by setting your domestic taxes to zero. But two further issues to think about. One, tax incentives and strategic responses. So what about tax incentives? We know that many developing countries and not just developing countries, but particularly developing countries, have all kinds of special provisions, tax holidays, very generous deductions, special economic zones that may have direct tax authorities, so on and so forth. Very remarkably broad provision for tax incentives. Well, the remarkable thing about the minimum tax rule is it makes no exceptions for those things. There's no grandfathering of tax holidays. There's no special provisions to allow countries to carry on with special economic zones. All that kind of goes, which is another big deal. Again, I think many tax people like me would see that as a big plus of the minimum, because experience suggests these incentives aren't really terribly effective. Of course, investment policy people see things differently. I think they can see, well, hang on, what's going on? You're kind of destroying our investment policy in one sweep. So the caveat to that, if I go back to the other slide, is that it's not quite the case that these things have no effect. Because of that first term, they still have an effect through that T-term. So they don't kind of completely go away, but they become less effective. You can see, for example, if you took a company that had no carve out, then you gave it a holiday. Well, the holiday would just get completely wiped out by the minimum tax. So there's a big issue here for countries thinking about what they're going to do about their incentive policy. Of course, as I say, everything I've said, again, only applies to the large multinationals. Many incentives are going to be benefit smaller companies, but nonetheless, this is kind of a bit of a wake-up call for thinking about what our incentive policies, tax incentives policies are doing and what they should be trying to do. I'll be very brief just on this last bullet. It's probably easier to kind of, if you're interested, take it away and look at it later. There are, as I mentioned at the outset, special provisions for things like accelerated depreciation, which operate through timing differences. They give you a lower tax burden, lower tax bill now, but a bigger tax bill in the future by bringing depreciation forward. Things like that that are kind of more or less standard and that operate through timing differences. The minimum tax rules essentially provide a way of kind of evening out that timing difference, removing the timing difference, which means that those measures do still have some effect. Things like accelerated depreciation do still have some effect and that's what the algebra there is trying to convince you of.  Refundable meaning that it has to be a tax credit that you will, if necessary, give back to the investor if their entitlement exceeds their tax liability. Basically, these are things that are like cash grants. They're treated in exactly the same way as a cash grant. Basically, they're added to your accounting profit and taxed that way. That can technically get you below the absolute minimum, but really there's nothing to do with taxes here. This is just like giving a straight cash subsidy to the company. We should note too, the other thing, of course, on incentives is that, well, if countries are less able to compete by offering corporate tax incentives, they're going to look for other ways to compete. They could be other tax ways to compete. You could, for example, try to slightly restructure taxes that are not covered by the agreement so that they are covered by the agreement, which basically reduces the amount of top-up tax you'll face. But I think more obvious is that we can expect countries to compete more on spending measures of various kinds, on providing roads and business training opportunities, which are all the things that may be subject to all the same difficulties that we've seen with tax incentives. They may have governance issues. They may be redundant. That is, they're not actually necessary for the investment to take place. But I think potentially one way in which we will see things moving is towards more provision of spending incentives. The final thing I just wanted to say something about is, well, we've seen a little bit about what we think that the low tax countries might do in terms of, for example, imposing this QDMTT, reviewing tax incentives and so on. Well, what about the high tax countries? How will they respond? And this is a concern that I think a number of observers have expressed that, well, okay, we understand that the minimum is going to set a floor. But is that floor going to become a ceiling? That is, are all countries somehow going to feel that we can't offer a rate above 15%? We're going to have to cut a rate towards 15%. Well, of course, nobody knows what the answer that will be. My sense is that if you look at the literature, such as it is, it tends to suggest that when other countries increase their tax rates, I increase my tax rate. I don't reduce it. That is, there's strategic complementarity in strategy rates. So that suggests that when low tax countries are forced to raise their rates, excuse me, the high tax countries are going to raise their rates in response, or at least not a set higher rates than they otherwise would have. And that becomes important, because it also means, and this is something I've been doing some work on, also means that even the low tax countries that are kind of forced away from their preferred tax policy by being obliged to raise their tax rates, even they might gain from the imposition of a minimum tax. Why is that? Well, essentially, if you think it through, imagine this is a kind of an equilibrium, a national equilibrium where countries are setting tax raises to, essentially, their best possible tax rate, given the rate the other country sets. Well, what happens then if we force a low tax country to raise its rate, just to kind of have a little bit? Well, that really has no impact on the welfare of the low tax country, because it's choosing its tax rate, ultimately to begin with, then essentially as an envelope result, being forced to raise its tax rate a little bit more has no first order effect on welfare. So if you're, I don't know, Ireland, you've set a 12.5 percentage rate, being forced to raise that rate to 12.6 percent really has no impact on you, doesn't really matter. However, suppose that when Ireland raises its rate, other countries raise their rates in response. Well, that increase abroad does convey a first order benefit to Ireland, because it essentially pushes profit shifting back in honest direction. So you have no effect from the own change in tax rates, but a positive effect from the change in other countries. That means that even the low tax countries can benefit from imposing a minimum tax. Eventually, of course, that gain is going to disappear, because essentially, although you're taxing the low tax countries, taxing shifted profits at a higher rate, the amount of profits shifted is going to eventually go down. So you have the kind of pattern here. So this shows, for example, this is the welfare of the low tax country. Along the bottom, mu is the minimum tax rate. So TN is the initial Nash Equilibrium tax rate. So you can see that as you raise the minimum from zero, initially nothing happens. Then once you have a small minimum rate, slightly above TN, high tax, welfare in that low tax country goes up. It keeps going up until at some point, the reduction in profits shifted to low tax country becomes dominant. And now welfare starts to fall in the low tax country. And eventually, it ends up worse off, as you see at that point, mu star star. It ends up worse off than it was initially before the introduction of the minimum. You can see there's this whole range between TN and mu double star where the low tax country actually benefits from the minimum tax, which might be kind of slightly surprising that being forced to do something you didn't want to do, the low tax country is gaining. Nonetheless, that's what the analysis suggests. And the question then becomes, well, how big might these effects be? So for example, what is the minimum tax rate that the low tax country would most like? Which going back to this picture, that's at this level mu star, mu with a single star, the peak of the curve. That's the minimum tax that gives the highest welfare to the low tax country. So we might ask how high is that? And then we might also ask how high is mu double star, because that's the highest minimum rate that still leaves the low tax country better off. And essentially what some of the work I've been doing with the colleague called Shafiq Habus suggests, is those numbers maybe quite high? Again, just running through this, it suggests, for example, that the most preferred guys start with an initial rate of 12.5%, calibrate the model a little bit, then the most preferred rate, that kind of peak point for the low tax country, comes at something like 15% to 19%. And that's quite a, in terms of the policy debate, the difference between 12.5% and 15% to 19% is quite big in terms of numbers people are arguing about. And if you ask what that mu double star is, so mu double star, remember, was the mu double star is the point at which the low tax country starts to become worse off than it was before the minimum, that may be like 17% to 25%. So you're saying that even if you're a low tax country on 12.5%, you may benefit from sending a minimum tax up to 17% or more. And this also, by the way, matters for revenue. So the recent IMF paper in something called the fiscal monitor, they basically say, well, suppose we take those revenue estimates that I was talking about above, and now let's add to that a strategic response in the form of higher tax rates in the high tax countries of the order that the empirical literature suggests. Well, actually that doubles the revenue gain. So the total amount of revenue gain doubles and becomes quite significant if this strategic response works out. So I'm going to, to Yuka's relief, I'm going to just wind up now concluding. If you think about, well, what are the kind of policy prescriptions that come out of this? Well, the one that I think is very clear is that there's a strong case for countries to adopt a QDMTT. In some sense, of course, there's a lot of politics involved in that. We have to think about the attractions of pillar one. But in the context, just to think about pillar two, there's clearly an incentive to just a kind of a national self-interest suggests signing up to the agreement and adopting a QDMTT. There's clearly a case, I think, too, for countries to start reviewing their tax incentive strategy, because this really is a new world for thinking about tax incentives, as I say, initially for the big multinationals. Clearly, I should say in all this, there's a sense that, well, this is applying for the moment to large multinationals. But if it works out, it's clearly, many would clearly like to see it applied much more widely. Another lesson is, you know, begin to prepare suit, because the expectation of the deal, as I say, it's not yet agreed, is implementation really starts towards the end of next year. And this is a big deal, and it's not a simplification, because all the changes I've been describing, pillar one and pillar two, they actually come not as simply as entire replacements for the current regime, but on top of substantial elements of the current regime that will remain. So I think with that, there are some, some open issues. But I think for that, and just to see if there are any questions I cannot with, let me leave it there and hand things back to Yooka. Thank you. Thank you very much. Thanks so much for walking us through on what is quite complicated, but very very tiny set of issues. We still have some, some opportunity for precedent and comment. Do you think this will be easy to implement in your country? So are there, can you think about the implementation challenges? There was one person from the back here, Silvia please. I don't like this question. More of a question like the differences in countries, the main reason why they're not national, engaging in both issues. But when you look at the developing countries, there are all these risks, including, you know, the lack of economic stability, the political risks, that also, you know, impact the decisions of the national issues. So I know this is probably going to help in any way, but I think there are so many economic things in developing countries that are kind of disadvantageous. So I feel like over and above the tax rate, the amount of tax money we shoot their profits are probably because they've deceived the wealthy countries to produce a lot of money. So that's my concern for this. And then related to that, there's an issue of developing countries, African countries, dependent on fiscal incentives, we're not quite happy with that. So even though there's some, you know, probably there's some evidence that that's open up in this one, I still think it's going to boost their option for the African countries to use taxes, essentially. Thank you. Yeah. Make it a question. No, I think I got the second one. On the first one, I think it was, that really there are a lot of other non-tax things that are going to matter. Yeah, exactly. Okay. No, they're both good points. I think on the, yeah, I think it's certainly true. Non-tax things kind of always matter a lot. I suppose the question is what is how, for example, this, the minimum tax can affect, can change the risks, whether it can change the risks that investors perceive. Because, you know, those kind of risks are always going to be there. So the question is, well, how does the minimum affect it? And I think you could say, well, it's going to be really important for countries to signal early on what they intend to, what they intend to do. What they intend to do, for example, leading into your second point about tax incentives, what they intend to do about their basic corporate tax rate, whether they intend to basically sign up to the inclusive framework agreement or not. So I think at one level, you know, the mechanics of the deal might not affect those risk considerations very much. But I think there are additional uncertainties are created that can be created, which I think will not, maybe to your point, won't work in the direction of helping developing countries. But I think it makes it important for tax administrations and so on to be talking to multinationals and laying out a policy. Because multinationals also don't really quite know how all this is going to play out. So I think it's going to be very important for them to know, as soon as they can, how the host countries plan to respond. Even to show that they know what's going on, even to show that they are thinking about it, I think can be important. On the tax incentives, I guess I just have a slightly different perspective. I suppose two points. I have a slightly different perspective. I think there's a lot of evidence that, you know, tax and, you know, one can always find a point anecdotal cases where tax incentives appear to work. But then there's a lot of experience suggests that, you know, there's a lot of surveys show a lot of redundancy incentives being offered when they weren't really necessary. And so on and so forth. But so I even on kind of the existing kind of world, I may be more doubtful about the advantages of tax incentives than you are. But I think also to bear in mind that this will affect everybody. So it's not just, you know, the case that says, I need tax incentives because my neighbouring country has tax incentives. In a way that argument goes away if the neighbouring country is also subject to the minimum. So it is a kind of a coordination device on the tax incentive kind of thing. So I'm I do see that as a more as a more positive elements of the agreement than than you do now. And as we saw as we were saying, you know, just so I just on it, it's, you know, going back again to the algebra, it's not the tax incentives don't have any effect. They still have some effect to the extent of that carve out, which you can argue, okay, that's fine, because the carve out is saying it only has some effect to the extent that there's some real activity going on here. So I wouldn't be as I wouldn't be as depressed about it as as as you I think. So the policy advice is to adopt this QD and whatever it was. Yeah. How difficult it will be to implement the developing country context. This is I'm just looking at thoughts on that. So, or is it the case that the rich countries will find it easier to do and then then then they cut the revenue? I think it's going to be true that I'm sure that they clearly the higher income countries will find it easier, easier to do.  But you know, on the face of it, it doesn't seem, I mean, a lot of the, well, let me step back. I suspect a lot of the issues may be accounting issues. Because remember, in all, we know one thing that becomes very important here is the accounting is the definition of that P, which depends on the accounting standards being used and details of accounting that are certainly far beyond me. So I think a lot of the gameplay may well be on the accounting side of thing. And I think, for example, the OECD has been hiring accountants lately, because they see that that's going to be where a lot of the work is. So, you know, I think in some sense, you know, it's not that hard, but the C is the C is pretty mechanical. If you know tangible assets and you know payroll, T is relatively straightforward. All the issues become accounting ones. It's how you account for the third taxes with accelerated appreciation, that adjustment I mentioned. I'm sure, you know, defining what tangible assets are, figuring out what how you're going to measure payroll, all those kind of things. So I don't think it's, I think it's probably easier than a bunch of the transfer pricing cases that developed in countries that are asked to deal with that, which they will still be asked to deal with. So it is, it's going to be, it's going to be a challenge. Yeah. Anything else? Yeah. Ezekiel, please. Thank you. Despite the good idea that the noise is in terms of the country that signed that framework still agreed. So I'm wondering whether you are in, but there are some options for you not to implement what you have signed. I missed, sorry, I missed the very last, I missed the punchline options. Is it still possible to not to implement what you have agreed to? I mean, in a sense, game the system? Is that what you're saying? Yes, because there are some countries that are being, to be, always being from it, but they do practice a whole lot of implementing the, in particular, in another country. I think, well, you can always, I think you can always, you can always say you want to stay out, but I think the, you know, a feature of the way that Pillar 2 is designed is that really, the pair of the capital exporting countries could just do this without anyone's, they don't need anybody to agree in other countries. They can all just apply. But really, really what's going on is, is the idea, it really comes from the 2017 tax reform, this guilty, which is the, which was the US tax proposal that, which was really imposing a minimum tax in effect on US multinational earnings abroad. And it's something if all capital, if all the big capital exporting countries do this, which they can simply do in their domestic law, they don't need an agreement for this. Then it's very hard to stay outside, because they will just do the topping up for you. So, I mean, there are, there are various kind of games that, that companies I think may be able to play. But I think that, as I say, it's really, it's called an agreement. But in a way, these are just things that the, the capital exporting countries have got in one interpretation, they've just got to get, can just get together and do in their domestic law. And then, you know, everybody else has to think, how do they best respond to that? And the best response to that may be basically to, to play the same game and apply the QDM TT, which the, which will basically neutralize the impact of the, of the capital exporting countries. I don't know if that's what you were getting at, but I think it's, it's kind of cunningly or evenly one or the other designed to, to, to make it very hard, meaningfully to opt out. If, you know, assuming that, you know, what's important I think is that you get this critical mass or what's important for the argument I just gave is that there is this critical mass of, of the major, basically the big G7, G20 countries applying in. Okay. I think we need to stop now because the other problem is the investing. So thank you so much, Mick. That was marvelous. Well, thank you. Thanks to your patients. Thanks very much. Cheerio. Bye-bye.


Okay we'll you know resume the class but yeah if the video or audio quality is rather bad do let me know because you know we need to put up these things on the e-platform and it should not be a rather shabby job so so you're saying the video quality is about the same I mean has it changed at all? Let us take the pasta and we continue. Okay all right sure yeah so we have looked at the background in Galatians chapters 1 and 2 we will now get into chapters 3 and 4 so if we could have maybe someone read out Galatians chapter 3 verse 1 please if we could have one person read out Galatians chapter 3 verse 1 please yeah Aashah go ahead okay yeah it showed that you had raised a hand and so I thought maybe you had a question all right yeah so here Paul says to the Galatians you foolish you know the JB Phillips translation it kind of gives a rather I don't know literal kind of a translation and it says oh you dear idiots of Galatia now I think that's a little bit too rude but the term that Paul actually uses over here is the Greek word Anoetos now that word Anoetos means someone who actually can think you know can perceive what is the right thing but they are choosing not to you know so in that sense they are being foolish in the sense they do have the ability to discern whether what is being told is right or wrong but they are not using their reasoning and they're just simply taking I know the wrong information for granted so they are being foolish in that sense and so Paul says you foolish Galatians after you have been so clearly told the truth why is it that you are so you know easily being swayed away is what you know he says over here so moving on to verses 4 to 6 if we could have someone read out verses 4 to 6 please did anyone read out because I mean I can't hear anything at my end did you suffer so many things in vain if indeed it was vain does mean who supplies the spirit to you and what's miracles among you do so by words of the law or by hearing things just as Abraham believed God and it was counted to him as righteousness all right so here Paul reminds them that they've had to go through a lot of persecution for their faith so it has not been easy for them so in spite of having you know their their properties being taken away and in spite of the social you know antagonism that they've had to face in spite of all that they held on to the belief that if they place their trust in Jesus and if they follow him then they can have eternal life they have held on to it in spite of all the sufferings that they have gone through and so he says now after having gone through all of that why are you being you know led away because then all that you have endured would be wasted it would be in vain if you're now turning away from Christ and thinking that you would have to go back to the mosaic law for your salvation and so he says do not allow all of those sacrifices which you have made to go waste what you did in the beginning was correct you know when you placed your faith in the Lord Jesus and him alone because he is sufficient to grant you eternal life so he says that to them and then he asks this question he says so again I ask does God give you his spirit and work miracles among you by the works of the law or by your believing what you heard how did you receive the Holy Spirit did you receive the Holy Spirit when you followed the mosaic law or did you just receive the Holy Spirit because you placed your faith in the work which Jesus Christ did on the cross so did that lead to you know the Holy Spirit being given to you and the obvious answer to that is that they were when they once they were told that it is through Christ through his work on the cross that we receive eternal life they believed it they accepted it and when they did that the Holy Spirit was automatically imparted to them and so now in the same way even the miracles that you know they are that they have experienced in their lives did they have to earn those miracles or were the miracles simply given to them because they trusted in Jesus and trusted in what he had done on the cross okay so obviously it was just the simple faith which led to the working of miracles now just an application you know from this for us today when when we are waiting upon the Lord for an answer you know to our prayers and we are looking for healing or whether we are looking for any other kind of miracle there are there's this kind of feeling among people that they should earn that miracle so they tend to use two kinds of methods to get what they need they either use the begging method or the bribery method the begging method is you know they just they feel that if they just know go on praying and praying and praying long prayers and beeping and crying and begging God and saying Lord you please do this you make this happen and if they feel that if they cry enough and they say you know plead enough then he will maybe be moved his heart maybe maybe moved to give them what they need that that is one wrong approach which people take the other wrong approach that people tend to take is the you know the mode of bribery okay if I spend a lot of time you know reading the Bible and then if I contribute financially to the church and if I do all of these good deeds then maybe the Lord would you know feel that oh here this person is so good and because they are so good because of their goodness I should you know grant them this prayer request so both of these are in fact a wrong ways of you know having our prayers answered because just like the receiving of the Holy Spirit the working of the miracles is also not something that we earn it is just based on faith so we choose to believe that what Christ Jesus did on the cross for us is sufficient for him to grant us whatever our prayer requests are and to provide for us so we should not be using the begging mode or the bribery mode you know to to receive miracles from him just like we place our faith in Jesus Christ for salvation we must also place our faith in Jesus Christ to receive whatever we require for our life so we trust him we trust the work that he has done on the cross and that is sufficient for us to receive from him alright yeah the last portion of what we read that would be verse 6 so also Abraham believed God and it was credited to him as righteousness is what it says so let's just maybe actually look at that particular passage in Genesis how exactly was belief credited to him as righteousness if we could have one person read out Genesis chapter 14 verses 5 and 6 Genesis 14 5 and 6 please oh it's 15 I think Genesis 15 okay is that the one where it says this man will not be your heir yes okay I better make that correction thank you thank you yeah go ahead please okay man and before the word of the Lord came to him this man shall not be your hair your own your very own son shall be your hair and he brought him outside and said look toward heaven and number the stars if you are able to number them then he said to him so shall your offspring be and he believed the Lord and he counted it to him as righteousness thank you so this is the you know event where Abraham chooses not to take any kind of financial you know profit from the pagan king and then the Lord comes to him and says you know I will be your reward and then he says whatever you give me Lord is really not of much use to me because I do have no child to pass it on to it will in fact go to slave in my home you know slaves in those days were not really slaves in the sense of somebody of low status they also would be highly educated and highly trained it's just that someone has invested a lot of money and purchased them for the household so they are in fact very expensive and very valuable so that person will inherit whatever you give me is what he says so then the Lord assures him and says no no no this man will not be your air in fact someone from your you know your own flesh and blood would be your air and the Lord takes him outside shows him the sky and he says count the stars now of course in our urban cities we get to see very few stars because of the you know pollution and the light pollution as well because of all the city lights but in those days when he would have gone out and looked up at the sky he would have seen innumerable dots lots and lots of stars so when the Lord says start counting them it really would have been quite a task because to count that many number of you know white dots so the sky would have been full of stars and God says this is how your descendants will be such a large number and Abraham who's never had a child in all of these years chooses to trust what God is saying so he just simply places his faith in God's words and says okay God is saying it God would not lie and so he believes the Lord and because he places his trust in the Lord in that simple childlike manner that is credited to him as righteousness so it's the same with us we believe that if we trust the Lord Jesus and what he did on the cross that's enough he will grant us eternal life we choose to believe that if you just simply trust him that whatever he has done on the cross is sufficient we will receive our miracles so it's just a very simple faith in the words which God has spoken God said if you believe in me I will do this so we just simply in a childlike final way we say okay Lord if you're saying so we know that you have spoken the truth so we choose to believe even though it may or may not logically you know make sense to us so we just simply place our faith in him in his words in what he has spoken knowing that he will never you know mislead us and that he would never lie to us so in this entire process we do not see any mosaic law being followed by Abraham we don't see him being circumcised at this point of time in fact it's two chapters later many many years later that Abraham is asked to be circumcised you know mosaic law of course is not introduced at all during his lifetime but the circum the system of circumcision is brought in but that is later when when Isaac is when Ishmael is almost I think maybe a little either in his teenage years or a little before that so that comes much later so the point that Paul is making over here is that the Lord credited Abrams faith to him as righteousness with no circumcision being involved anywhere in the process and so he says in verse 7 understand then you know we've been coming back to Galatians Galatians chapter 3 right we're in Galatians 3 7 understand then that those who have faith are children of Abraham in the same way Abraham just took God at his word and said if you are saying so Lord I believe it in the same way if we choose to believe what Jesus has claimed about eternal life if we just choose to believe it then we also become children of Abraham is what Paul is assuring over here and so here Paul is you know kind of making the point to those judicers and saying to them you know you seem to be under the impression that genealogically descending from Abraham makes you children but you know what the fact the truth is that you know being in his genealogical lineage does not make your children what makes your children of Abraham is actually the faith that you place in the words of God okay is the clear point that he makes and so he wishes to assure this Galatian Gentile believers you know the Gentile believers who are there among the Galatian church and he wants to assure them and tell them you are in no way inferior to the other believers who have descended naturally through Abraham's lineage because of your faith because of your faith you too have become Abraham's children so you are in no way inferior you don't have to try to imitate the the Jewish believers is what he he wants to assure them off over here now if we could have one person read out verses 10 and 11 please 13 years old okay so he had just entered his teenage years thank you so much for that yes yeah if we could have someone read out verses 11 10 and 11 read in the book of the law and do them now it is evident that no one is justified before God by the law of force the righteous shall lead by faith yes so here we have Paul pointing out that following the law in fact does not lead to blessing because that was the way it was in the Old Testament the Lord said if you want to be blessed then follow the law you know fulfill the mosaic law and then you would be blessed is what God had taught them in the Old Testament times and so these people these Judaizers are still under the impression that if they follow the law of Moses then they would be blessed and now Paul is saying it's the exact opposite earlier maybe following the mosaic law would have led to blessing because that's basically what Yahweh had put in place but now Jesus Christ has given a new covenant so now you if you were to follow the mosaic law rather than being blessed you would end up with the opposite result of being cursed cursed is everyone who does not continue to do everything written in the book of the law and we have you know that explained further to us in James 2 10 where it very clearly says whoever keeps the whole law and yet stumbles at just one point one single time you need to mess up with one single law among those 613 that have been given and you're done it's like as if you are guilty of breaking all of it is what it says in James 2 10 it says so clearly over there whoever keeps the whole law yet stumbles at just one point is guilty of breaking all of it now that is the reason why this law which is a good thing became a curse because nobody was able to keep it that perfectly only Jesus was able to fulfill the law completely he kept it every single time did not break it even once did not break even one point even once he was able to keep the law completely fulfill every requirement of it all the 613 laws but the others could not do that and so it the law which is a good thing became like a curse for people because they're unable to continue doing everything written in the book of the law as was required and so if he goes to Paul says in verse 11 clearly no one who relies on the law is justified before God because they all fail at some point people fail therefore he says the righteous will live by faith now this term the righteous will live by faith has been taken from Habakkuk chapter 2 verse 4 if we could you know maybe read that yeah if somebody could read out Habakkuk chapter 2 verse 4 please Habakkuk chapter 2 verse 4 behold his soul is puffed up it is not upright within him but the righteous shall live by his faith okay see here there's a contrast between the wicked enemy and the righteous godly person and so it says over here regarding the enemy that he is puffed up his desires are not correct he does not have righteous desires on the other hand in contrast the godly person he chooses to live by faith so over here it's not really talking so much about belief it's talking about faithfulness so over here this particular verse is in fact talking about works okay the works of the enemy the wicked man are not good when you look at his works you realize that his heart is all puffed up that he's in fact rebelling against the living god he wants to live in his own way as opposed to that when you look at the righteous godly person if you look at his works you see that he is a man of loyalty and faithfulness he chooses to stay faithful to God and so if you were to take Habakkuk chapter 2 verse 4 at face value it actually is talking about good works and evil works but then when we come here to the New Testament and this particular phrase is picked up from Habakkuk 2.4 in all the three places where this particular phrase is used in the New Testament it is so clearly demonstrated that just simply good works on their own cannot save it's rather the belief that you place in the god who is asking you to do the good works the belief that you place in him and in the righteousness which he has to offer freely not you know you cannot earn that righteousness it's something that he gives to you freely if you place your faith in that god and what he is offering to you then that would lead to salvation and then out of that salvation because now you are saved you choose to live like a saved person you choose to live in a righteous way so in Habakkuk 2.4 you don't quite get all the clarity because we have to understand in the Old Testament it was very clearly just partial revelation throughout the Old Testament what God was kind of revealing to the people was still only partial revelation and so to understand all the scriptures in their fullness in a completeness in the Old Testament you know those verses we can only really understand them fully when we now look at them in the light of the New Testament okay so so when when Habakkuk under the inspiration of the Holy Spirit first spoke these words what he spoke was a very important truth but he could only catch one part of it and all the three instances where this particular phrase is used in the New Testament the emphasis we see is on salvation so you know even though we kind of started off the class late due to all those technical problems it would be really good if we could very quickly look at all of these three references and see how these this whole aspect of faith is you know emphasized in these passages so we'll begin by looking at Romans chapter 1 verses 16 and 17 if we could have one person read out please Romans 1 16 and 17 can I read pastor yes please for I am not ashamed of the gospel of Christ for it is the power of God to salvation for everyone who believes for you first and also for the grief for in the righteousness of God is revealed from faith to faith as it is written that just shall be by faith okay so over here in Romans 1 16 it says the power of God that brings salvation to everyone who not who do who does good works it says to everyone who believes so the eternal life the salvation that is being offered it is being offered on the basic of belief on the basis of faith and it says in verse 17 a righteousness that is by faith from right from the beginning from first to last it is just by faith that this righteousness is being given so in this particular you know verse where it's talking about the rather just will live by faith the righteous will live by faith the emphasis is being placed on eternal life how do you gain that eternal life that eternal life is given to everyone who believes you know verse 16 God the power of God that brings salvation to everyone who believes and therefore that I know the righteous will live by faith the emphasis over here is on eternal life how do you gain eternal life it is by faith alone moving on to the next verse Galatians 3 10 and 11 if someone could read out Galatians 3 10 and 11 though I know the the the one which we just read out now if someone could just read it again ma'am Galatians 3 10 and 11 but as many as are of the works of the law are under the curse but it is written cursed is everyone who does not continue in all things which are written in the book of the law to do that but that no one is justified by the law in the sight of God is evident for the just shall live by faith now over here in this passage the emphasis is on whom you have placed your faith on if you have placed your faith on the law then you must continue to do everything written in it and you must do a perfect job of it if your faith is on the law on the other hand if your faith is being placed on God and on what he has offered through Jesus then your fear your righteousness you know your salvation will come to you through the faith which you have placed so here the emphasis is on the object of faith are you placing your faith on the law or are you faith placing your faith on on what you know Jesus Christ has done um okay we'll we'll we'll look at that um yeah just to move on to the third passage Hebrews chapter 10 26 and 27 Hebrews 10 26 and 27 for if we go on sinning deliberately after reciting the knowledge of the truth there no longer remains a sacrifice for sin but a fearful expectation of judgment and a fury of fire that will consume the ever since ever okay so Hebrews chapter 10 you know it's a lengthier passage but over here he's saying you know you believers you're living in sin and that is not correct uh so if he goes on to say in fact if you deliberately keep on sinning uh you know the sacrifice for sins which Jesus Christ has done it will no longer apply to you you're the only thing you will have to expect from him is judgment so he goes on to say in verses 34 to 39 he says you know once upon a time you suffered so much persecution and you gladly went through that he says in Hebrews 10 34 joyfully accepted the confiscation of property because you knew that you yourselves had better and lasting possessions you knew that Christ has promised you eternal possessions and so for the sake of that you were willing to even give up your property you know lose the things which you have on this earth and so he says in Hebrews 10 35 do not throw away your confidence you know this confidence which you have placed in the words of Jesus and the promise that he has made do not throw away that confidence hold on to it and then he says you need to persevere so that when you have done the will of God you know you will receive what has been promised and so then in verse 38 Hebrews 10 38 he says and but my righteous one will live by faith and I take no pleasure in the one who shrinks back okay so here when this phrase uh the just shall live by faith is used here the emphasis is on the person who is putting the faith what kind of a person is it is it a person who has you know placed their faith in God and are acting it out in their everyday life or have they claimed to have placed their faith in God but their lifestyle does not show that they have any trust in him you know so so in in these three places where this particular phrase is used in the New Testament you have emphasis on one aspect of this phrase the just shall live by faith and each of these three places the meaning is brought out that it is faith which is important and out of that faith your action you know flows out so that is very clearly clarified for us in these passages that it is faith which leads to salvation now the very valid question you know which has been posted over here posted over here is what is the role of repentance to gain salvation so before a person becomes saved when they experience the conviction of the Holy Spirit and they begin to understand what Jesus Christ has done for them on the cross at that point you know they feel that oh I am a sinner I deserve punishment and judgment but God and His mercy has made an alternate arrangement for me and so you know He's inviting me to accept that so when somebody hears that there could be multiple ways that they respond to that one response could be oh this is all just a fairy tale not to be believed on the other hand there may be some people you know who may say oh I can think about it you know this seems like a good idea good concept but let me think about it and they know they wait for a while there could be others who immediately respond and say oh yes I am indeed a sinner and here is a God who wants to give me a second chance he says he's just going to wash away all of my sins and allow me you know by His strength to start living a new way of life no longer living in sin so that person chooses to respond and that we call it the act of repentance so when a person is repenting they may not really know the entire doctrine behind salvation they may not have you know God caught the full picture but there is one basic thing they are ashamed of the way they have lived so far that component will be there they have decided to give up the way they have lived so far no longer will I continue living in sin I recognize that this is sin and now I choose to place my faith in this Jesus who says he can give me a new start and he can give me salvation so it may be as basic as that they may not have caught all of the details of what this entire doctrine of salvation involves but one thing they know no longer am I going to continue living the way I did I want to change and this Jesus is promising me you know the washing away of my sins and this Jesus is promising me a new start so I choose to submit to him so that act of repentance becomes the beginning of the salvation experience so so what role would repentance play in salvation that is something that happens you know before you get saved at that point when you make a commitment and say now onwards I no longer will I live the way I used to no longer will I live in those sins I choose to come out of them I choose now to submit to this Jesus and follow him because he has promised me that he can give me a better life so that's a choice that you make now after salvation yes we continue repenting you know on a regular basis in the sense every time we we sin we go back to him for his cleansing you know which is what we looked at when we were doing the epistles of John so first John 1 9 you know by each time we sin we immediately we realize that we have done that and then we are ashamed of it we say Lord what I have done is sin so please cleanse me so we go to him and he's faithful and just he chooses to forgive us and he starts purifying us from the unrighteousness that is there in us so there is repentance which happens even after salvation and that that is basically regular daily cleansing which we do so that we can continue being a part of him so that we can continue having us having a strong connection with him so there is a role which repentance plays before you get saved and there is also the regular role which repentance plays in our lives you know on a regular basis yeah I hope that was satisfactory Elisha yes so brother Elisha I hope that was a satisfactory answer but then if you want to ask anything further you know you could actually do that yeah okay yeah I mean I could not hear too clearly but I think you said that was fine you know moving on to verses 15 to 18 yeah if someone could please read out you know all the way from verse 15 up to verse 18 to give a human example brothers even with a man may come in no no one knows it or adds to it once it has been certified now the promise we made to Abraham and to his offspring it does not say until offspring referring to many but referring to one and to your offspring offspring who is Christ this is what I mean the law which came 400 years afterward does not rule a covenant previously ratified by God so as to make the promise void for if the inheritance comes by the law it no longer comes by promise but God gave it to Abraham by promise okay now he says I will use a you know in in your NKGV it says I think an example from the I don't remember the exact wording over there but in verse 15 but then you know basically what he's saying is I'm going to give you an example from an ordinary life from the earthly life you know the life that we live down here I will give you a normal example and he goes on to talk about someone who has made a you know a will and so even though it's just a human will made by a human person you know we follow the the we respect the clauses which are there in that will which that person has drawn up and we fulfill it so the point that Paul is making over here is that he says you know when we give so much respect to a human contract to a human will that has been written out and we we see to it that it is fulfilled don't you think that God you know who has made his divine covenant with us don't think that he would keep his promises so he reminds these people and he says long back God made a divine covenant he made a divine promise to Abraham and to his seed so he clarifies and says you know this covenant was made with two persons it was made with Abraham and it was made with Jesus Christ okay so because he explains that it is it's not talking about all the people of Israel it's talking about Christ specifically over here when it says seed of Abraham so this divine covenant that God made with Abraham and with Christ saying that because you trusted my words because you placed your faith in me I choose to you know grant your righteousness do you think that God would go back on that and he says in verse 17 Paul says the law was introduced 430 years after this covenant was made between Abraham and God so do you think that just because a law was introduced 430 years later that law would just cancel out a divine promise that God made when human covenants are given so much respect and are fulfilled don't you think the covenant that God made with Abraham would not be fulfilled you know is the point that he is making over here so he says it because of God's because of what God said righteousness will definitely come through faith just as he promised Abraham just as he promised Christ it will not come through the law because the law was not given in the picture at that time the law was only given 430 years later so we will look on at verse 19 and the other verses that follow regarding the law and the role that the law played so we'll do that after the break so if we could all rejoin please at 10 o'clock yeah so we will resume the class at that time thank you


The pomegranate has been revered through the ages for its medicinal properties, so much so it's been used as a symbol for some medical organizations. Fruit seems to be a better representation of health than a snake on a stick. Supposedly beneficial for a wide range of diseases. Even the cannibals love it, improving the color of kid meat. No, they're talking about baby goats. It just gave me a bit of a double take when I saw this study. Most of the attention over the last decade has focused on pomegranates and prostate cancer, starting with in vitro studies, showing more and more pomegranate extract can suppress the growth of prostate cancer cells in a petri dish by up to 95%. Well, what about normal prostate cells? This is what normal prostate cells look like under a microscope, with a little or a lot of pomegranate extract. No real difference. Doesn't seem to do much to healthy cells, but here's what prostate cancer looks like just decimated by the pomegranate. But this was in a petri dish, not a person. Yes, if these results translated to the clinic, it could be dramatic, but first we have to try it out in people. Primary management of prostate cancer consists of either radical surgery or radiation. Despite this, a significant number of patients relapse and ultimately develop metastatic disease. Even after a radical prostatectomy, in about a third of the patients, the cancer comes back, as evidenced by rising PSA levels. At that point, the treatment options are limited. You already took out the prostate. The next step is essentially chemical castration, hormonal ablation, just like breast cancer can thrive on estrogen, prostate cancer can thrive on testosterone. So you can try to wipe out testosterone, but that can have such negative side effects. Anything we can do to delay that would be good. So what about plants? They note that men in Asia have the lowest prostate cancer rates in the world, up to 10 times less than North America. Now is this just a genetic thing? No, when Japanese individuals move to the United States and start eating and living like us, their breast and prostate cancer rates shoot up right towards ours. This could be because of what they're eating more of here. Animal products is the strongest risk fact for prostate cancer worldwide on kind of a country-by-country basis, or because of what they're eating less of here. Their traditional low-fat high-fiber diet was soy products, green tea, and plant-rich in general. So did these researchers try sticking these cancer patients on a plant-based diet? No, they just had them drink a cup of pomegranate juice every day. Why? Because the study was funded by the pomegranate juice folks. At least they were allowed to take it by mouth. So what happened? Well, in the three years leading up to the study, their cancer was steadily growing, as measured by their average PSA levels going up. Then once they started the juice, their tumors continued to grow, but it looks like they were growing slower. Now, in contrast, Dr. Dean Ornish and colleagues got an apparent reversal in early prostate cancer growth with a plant-based diet and other healthy lifestyle changes. PSA didn't just go up slower, it trended down, and dripping the blood of men on prostate cancer growing in a lab, the blood serum of those eating healthy, suppressed cancer growth nearly eight times better, whereas the blood of the men on the juice just suppressed cancer growth by about 12%. But still, to see anything just drinking a cup of juice every day is pretty impressive. The problem is there was no control group. Now, you could say they kind of acted as their own controls. This is them before and after. It's probably not just a coincidence that their tumors started growing slower right when they started the juice. But check this out. This is a drug trial trying to do the same thing. Treat men with recurring prostate cancer after surgery or radiation. In the drug group, tumor growth slowed in 55% of the men. Pretty effective drug, right? The sugar pill worked 73% of the time. The placebo effect can be so powerful that it may slow cancer growth. This is why we need placebo-controlled trials. Maybe tricking people into drinking pomegranate-flavored Kool-Aid would have the same effect. You think you're doing something for yourself, and so the cancer might slow. You don't know until you put it to the test. Finally, a randomized controlled trial of pomegranate juice for prostate cancer, and as you can read in the title, it had no impact. What do they mean? No impact. 25% of the cancer patients appeared to shrink their tumors as soon as they started drinking the pomegranate juice. Yeah, but 35% shrunk their tumors, not drinking pomegranate juice. So any effect appears to just be a placebo. It's the same story with pomegranate extract pills. They seemed to work until they went head-to-head with sugar pills and fell flat on their face.