As you all know, the EU-Turkey relationship covers everything from enlargement negotiation to the current massive issue of Turkey's role in the European and Middle Eastern migration crisis. It also covers issues like the relationship between Turkey and Cyprus, which is a huge issue and one which is being negotiated at the moment and which could develop in a positive way in months ahead, which would be very significant for the whole future development of European relationships in that part of the world. So without any further ado, Simon, perhaps you could get us going and bring us up to date in the simple tasks that you conduct for the Commission. Ladies and gentlemen, good afternoon. I think of all the daunting tasks I've faced this year, the one that's worried me the most is how to present the complexity of the EU-Turkey relations and recent developments while respecting the 15 to 20 minute time slot I've been given. I'll do my best, but I'm sure we'll have plenty of space left for questions and answers and an exploration of some of the other avenues of this complex and detailed relationship. Let me start by saying that on the 15th of July, Turkey witnessed a direct attack on its democracy symbolised by the shelling of the Grand National Assembly, and I sometimes ask myself how would I as a British citizen have felt if the Royal Air Force had bombed the House of Commons? I think that's a question that at times is worth asking ourselves because it explains and allows us to better understand the profound shock of this coup on the Turkish population and perhaps why some of the Turkish politicians felt that the necessary empathy and understanding was not always shown by their European Union counterparts. I think we have to be clear, this was an unacceptable act in any country in the world and the EU was also amongst the very first actors to condemn the coup attempt, while at the same time expressing as well its solidarity with the democratic institutions in Turkey. There have been a very large number of visits in the recent weeks to Turkey. I myself have been to Turkey three times in the last four weeks with Commissioner Avramopoulos, President Schulz, Commissioner Hahn, High Representative Vice President Mogherini, we've also had contacts at the presidential level, and this has I think already intensified what was a very high frequency of high level visits from the EU to Turkey in the last 12 months. I think what we've seen in the last period is bringing back onto a track or a level of engagement the EU-Turkey relations which we've not seen for many, many years, certainly not since 2007. This has in part been triggered by the migration crisis and I intend to devote a fair amount of my short time today to also talking to you a bit about where are we on the EU-Turkey migration statement, the implementation, what does this imply, what is the real state of this. But let me start perhaps by taking a step back into history because I think it's worthwhile just framing the EU-Turkey relationship by looking at the stage of our development. Turkey is a candidate country for EU membership. We opened accession negotiations in 2005, so that's some 11 years ago. They initially progressed reasonably well but we've seen them actually effectively almost stall in recent years. So if we take a snapshot of where we are today, we've seen 16 chapters opened out of which only one is provisionally closed and we're also not able to close chapters at the moment because that is one of the consequences of the decision taken by all the member states as a response to Turkey's failure to implement what we call the additional protocol but which in simple terms means Turkey is not effectively recognising or allowing at least the customs union to be extended, the benefit of the customs union to the Republic of Cyprus. But there are reasons over and beyond this which explain why the accession process has not necessarily progressed as fast as we would want. First is quite clearly the unresolved Cyprus issue. Cyprus joined the European Union in 2004 as a divided island. Unfortunately in the referendum on the Anham Plan at that time one side voted against but we've still been left with an issue which has constantly impacted on EU-Turkey relations. Partly as I said before because Turkey has continued to deny access to Cypriot vessels, Cypriot airplanes to its airspace and to its ports. I'll come on perhaps later in the presentation to how I assess the current situation in Cyprus and what this might mean but that had a direct impact on the negotiations in the sense that the European Union also said not only could no chapters be provisionally closed but eight chapters that were very closely linked with the customs union could not be opened with Turkey until Turkey effectively fulfills the commitment it gave at the time of its accession that it would apply the additional protocol and allow vessels and planes from Cyprus to travel to and from Turkey. But in addition to that we also have a further number of chapters which have been unilaterally blocked by Cyprus, meaning that key areas such as chapters related to the rule of law or also energy are not available for us to be able to as the European Union negotiate with Turkey. I think it's fair to say also we've seen a mixed view or mixed position from some of our member states. We had during the time of President Sarkozy's time as president in France particular difficulties with France who had said okay to carry on your accession negotiations but there are some chapters which you can't open such as agriculture, regional policy, budget because we don't want to give the impression that this is about Turkey joining the European Union. I must admit I've always struggled to understand quite what the purpose of accession negotiation should be if that wasn't the case but never mind. And all of this has of course had an impact as well on public opinion in Turkey from very high public support for a European Union membership of Turkey in Turkey in the early 2000s. We've seen that steadily decreasing over time and last but certainly not least I think we have to also recognize that the domestic politics in Turkey and particularly what we have seen at times on areas related to freedom of expression, rule of law have not always created a climate in which we are comfortable or member states are comfortable in seeing the accession process progress. If you take for example our annual reports on candidate countries we use quite strong language such as backsliding to describe the developments in the area of freedom of expression or the rule of law last year where we're seeing developments which have actually undermined some of the quite considerable progress we saw from Turkey in the initial years after it became a candidate country. Now but this relationship goes much beyond just an accession relationship. One thing I would just quote to give you an example is the importance of trade in our relationship. Turkey is a key partner for the European Union, it's our fifth biggest trading partner but equally the European Union is a key partner for Turkey. The European Union is Turkey's biggest number one import and export partner 40% of Turkey's trade occurs with the European Union and 70% of foreign direct investment in Turkey emanates and comes from the European Union and one of the reasons for this is for now 20 years we've had a customs union something perhaps which the British colleagues are now studying carefully to understand what this implies and what it doesn't imply also in terms of your ability to sign free trade agreements with third partners and when the customs union was signed with Turkey 20 years ago it was probably one of the most far-reaching ambitious trade arrangements that the European Union ever concluded with a party. Give you an example an industrial good produced in Turkey has today the same access to the single market as an industrial good produced in Dublin but what we're also seeing is that this trade relationship over time has also been overtaken by developments in the modern world so whereas the customs union 20 years ago didn't include services services dominate large parts of our economy today and one of the things my team are working on at the moment with my colleagues in DG trade is on a project to upgrade and modernize the customs union to extend it to the services sector extend it to public procurement cover agricultural products and also have an effective dispute resolution mechanism so that's one of the big axes of work we're seeing at the moment and where we're expecting to if all goes well present to the council a proposal for a negotiating mandate still this year on energy as well this is another area where we have a huge interest in working together Turkey quite clearly has the potential to become the primary transit country for energy supply to the European Union and is a key strategic partner for us we've intensified our discussions with Turkey over the last period we've seen a lot of work around the Trans Anatolian gas pipeline bringing the gas from Azerbaijan into the European Union where Turkey again plays a crucial role and will continue to do so it goes without saying that as a foreign policy actor Turkey is an important and strategic partner one only needs to look at the developments in Syria and witness the tragic events on an almost daily basis to see that the EU and Turkey working together will be an essential prerequisite for any solution to the Syrian crisis and putting to an end the the tragic humanitarian disaster we continue to witness it also comes back very prominently when we look at the migration crisis where I think it is the moment now to pay tribute to Turkey for hosting in relatively good conditions three million refugees in on its territory and if we see some of the debate that occurs within the European Union around this I think it's the right moment to pay tribute to that with Turkey having also taken other courageous decisions like for example opening its labour market to the Syrian refugees granting them full access to the education services to the health services with our support about which I'll come back to in a moment now I'd like just to take a step back to the migration crisis if we go back actually to around one year ago we were seeing in the month of September and October up to 10,000 people crossing the AGMC on a night large numbers of people losing their lives because the smugglers had many interests but ensuring the safe passage of people was not one of them and we were frankly in a bit of a mess and as a result of this I think the cooperation between Turkey and the European to try and solve European Union to try and solve this intensified and this culminated in what is called the EU Turkey Statement of the 18th of March 2016 which I think was a turning point in breathing some new life into our relations with Turkey but also into providing the beginnings of a solution together with the closure of the western Balkan route to the migration crisis that the European Union was faced with it provided both sides with a series of mutual commitments we on our side agreed to up our support in terms of funding also work with Turkey to accelerate the visa liberalisation process but it also provided a series of commitments on the Turkish side to effectively stepping up their action to combat the smuggling rings and stepping up their action to provide further support to the Syrian refugees on their territory now if you read the European Union press at times you would probably have the impression that the deal has collapsed the statement is failing and everything is not working well actually that is not at all the case and I think one of perhaps the best kept secrets in Brussels is that while the statement is still fragile it needs a lot of love and attention it is still holding up let me give you a couple of examples that back that up as I said before we were facing up to 10,000 people a night crossing the Aegean Sea and since the activation of the statement on the 18th of March the numbers have dramatically fallen we're now on an average of 94 per day since the 18th of March I think one thing that's also important to to really underline here is lives have been saved that's critical it's not something that we're actually very good at getting across if you take for example the first three months of this year January to March before the activation of the statement 366 people lost their lives crossing the Aegean Sea since the activation of this statement on the 18th of March there have been only 20 deaths I don't mean by that to suggest that 20 is an adequate figure it's 22 many but it's still a very significant reduction in the number of lives being lost in one week's time so that is on the 28th of September we will publish on the side of the commission our latest report on the implementation of the statement that will give you an impression of the different strands including for example the return package which allows people to migrate legally from Turkey to the European Union where so far I think just under 1500 people have been able to move and where work is currently ongoing in finalizing what is called the voluntary return scheme to bring to a more significant number of the people who can find legal path from Turkey to the European Union let me also just add all of this has been done in full and unequivocal respect of international law on the Greek side nobody has been returned to Turkey without there having been an individualized based assessment process which in perhaps part explains why the number of people that have actually been returned under the statement from Greece to Turkey still today is relatively lower to around 500 people I think this is one area where we do need to see improvements in the sense of sending a clear message to the smugglers that a passage to Greece in an irregular manner does not equate to being able to stay in the European Union where are we on some of the other strands that came about from this and much of which you'll read in the press let me turn to visa liberalization as I said one of the key commitments in the statement was that the European Union would support Turkey's efforts to fulfill the 72 benchmarks in the visa liberalization roadmap hope you note the clear sequencing support the efforts of Turkey to fulfill the benchmarks today we have around seven benchmarks that still need to be fulfilled we're working hard with the Turkish partners on this I myself have go very very frequently to Turkey I think I've been 23 times this year both in terms of negotiating the migration statement helping it hold it and working with our Turkish partners on this you'll have seen perhaps the one that features quite prominent in the press is the discussion about the anti-terrorism legislation quite clearly in the in the midst of the aftermath of the coup but also the threats that Turkey continues to face from both ISIS and PKK this is very sensitive but I think we have to be also crystal clear what this is about this is not about reducing Turkey's capacity to fight terrorism not at all this is about ensuring that the provisions of the terrorism legislation are not used in a way which stifles freedom of expression and leads journalists academics and others facing at times quite lengthy pre-trial detention on the basis of what they have said and the views they have expressed I'm fairly confident on my side that with goodwill on both sides there are solutions envisageable that will respect the red lines of both partners but I just want to also make the point because again sometimes you read in the press that there is this date of October by when visa liberalization must take place there is no such thing as a deadline to visa liberalization or a guillotine at which if Turkey hasn't got visa liberalization this prospect fades this is a process in which we're supporting the Turkey's efforts but the name of the game is you fulfill the benchmarks and then the commission will unequivocally confirm that to council and parliament who will need to take the decision in accordance with the normal procedures. Let me also turn to a another point on the facility for refugees in Turkey the European Union committed to providing an initial 3 billion euro followed by potentially a further 3 billion euro once the funds have been used up again this is a time something which one reads diverging views in the press let me be crystal clear on this and perhaps put an end to what I would describe it sometimes as the Monty Python-esque style rhetoric that emanates from parts of Turkey which seems to have no problem in simultaneously inviting European Union leaders to cut the red tape and inaugurate projects but then in the same breath claim that not a single euro of funds has arrived. Let me be crystal clear where we are on this the agreement to establish this facility was reached in February today some seven months later we have already committed around 2.2 billion euro for concrete programs and as of last night we had signed contracts of 700 million euro with over 500 million euro disperse concretely spent out on the ground making a difference this includes for example projects such as the provision of a little credit card to refugees so that with dignity they can take control of their own lives and use the funding provided by the European Union to buy food and other such items we're also very close to concluding contracts with the Ministry of Education and Ministry of Health which I'm still fairly confident will make this one this month that will bring over to the total over 1 billion euro already contracted in just a few months I think it's important to stress that and dismiss this image that occasionally crops up that no funds are flowing that is not correct. One of the other commitments we made in the statement was that we would further advance some of the preparatory work on some of the key chapters and we were able on the 30th of June to open the chapter on financial and budgetary provisions so-called chapter 33 and my team have also completed a lot of the preparatory work for the opening of other chapters such as energy education culture foreign security and defense policy and we're currently in the final stages of preparing some of the preparatory work around the migration security and rule of law chapters and one of the reasons why these chapters have not been able to be opened is because we are still not able to find unanimity amongst the member states notably with Cyprus having concerns which brings me to a point I want to just make I think we are facing a historic opportunity to see a settlement on the island I was very lucky to be able to have lunch earlier this year with the leader of the Turkish Cypriot community Mr Akinji and I went home that evening and I said to my family I think I've had lunch today with somebody who within the next 18 to 24 months I believe will be the Nobel Peace Prize laureate together with his co-leader the leader of the Greek Cypriot community I think this is a unique opportunity I think the negotiation methodology in particular the UN is using bringing the full ownership of both parties presents a wonderful chance to bring to an end a bitter divide I think it will also then provide the right moment to have a fresh look at EU Turkey relations where there should be no impediment to the opening of chapters I think what is crucial now therefore is to keep the engagement this is a relationship that matters for both sides and not lose the momentum and not lose the commitment for EU Turkey relations but this also involves a necessity for a constructive open and frank dialogue including on topics of difficulty or where we have differences of view and I can't end without just mentioning one word of concern on our side when we witnessed some of the developments in Turkey after the 15th of July coup and we look at the number of cases of people who have been arrested or dismissed I think if the latest figures I have we've seen around 40 000 arrests and over 100 000 people dismissed I think one of the key challenges that Turkey will face is ensuring that each and every individual is able to benefit from a fair trial a fair process with respect of the presumption of innocence and a case that is seen and is conducted in accordance with the highest standards of the rule of law I think this would be a challenge for any of our countries and this of course is something that I think on the side of the European Union while people have full understanding of the necessity to bring to justice the perpetrators of the coup in such a process this will raise many challenges and will be one I think that people will in our own public opinion follow very very closely and is likely also to play a role in determining the future direction of EU-Turkey relations I'll end there leaving plenty of space for some time and questions we are looking forward to hearing from the professor is professor of EU studies at the east town bull policy centre and he has a long distinguished career working for the United Nations and also as an academic in his own country and we welcome him by electronic communication and ask him to speak to us on this huge topic of his country's relations with Europe you're very welcome I also in particular thank the Institute for International and European Affairs and I greet of course my co-panelist Kevin Convay and Simon Simon Morgue as well as the participants so as a professor of EU studies I one of the first things I teach my students is about the difference between the various EU institutions and when I talk about the Commission I always make the point that the Commission is the best friend and ally of the candidate country of any candidate country I think Simon's folk was crystal clear on their sense and he has given a perfect illustration of of a real politic I would say how it works nowadays when Turkey has more and more difficulties to cope with the membership obligation so I would rather concentrate on the challenges ahead Simon Morgue mentioned some of them but I would like to go in the details of of these challenges and I would I would classify them into two I mean the internal challenges that the so-called Turkish challenges external the Turkish challenges I would I would summarize them in one sentence it is simply non-compliance with the Akiko Minotek I mean Turkey's Turkish governments practice and policies don't correspond to the Akiko Minotek of the European Union anymore since long time it's two different things I will give you some examples first technical examples Simon mentioned the 16 open chapters 15 are still ongoing the negotiations are proceeding I mean so-called proceeding one chapter is closed this is the tiniest one but the there are two chapters which are of particular interest to the candidate country Turkey which are under negotiation one is the environment chapter and the other one is the regional policy they are both open chapters they are they are discussed now with the relevant authorities on the both ends Turkey has tremendous environmental problems I will give you just one simple example the so-called environmental impact analysis doesn't apply in Turkey by degree and by law Turkey is negotiating the environment chapter with the European Union the second interesting chapter which is under negotiation is the regional policy well I mean we all know what is regional policy and how Ireland benefited from regional policy how important is the regions in Europe well we have a similar problem in Turkey and Turkey is an all-world centralized country and one of the requirements of the Kurdish politicians but not only Kurdish politicians of local politicians from everywhere in this huge country highly centralized is a bit of devolution and although not directly in in connection with the regional policy that letter well it helps very much like we have seen in Poland for instance or in in Romania you know the kind of decentralization well we are in Turkey not decentralizing at all actually we are centralizing more it has become I mean the Turkish system of decision making has become person there is only one person who decides in Turkey and that is the president Recep Tayyip Erdogan so discussions negotiations these are all nice words but these are also they are the harsh realities Simon mentioned the blocked chapters eight of them by the council the decision and the remaining ones unilaterally by the Republic of Cyprus for it's unfortunate especially for chapter 23 and 24 which are intimately related to the to the political questions I will come to it but there are three chapters that no one mentions not even the website of the Turkish minister of EU affairs these chapters are social policy competition policy and the public procurement let me give you one example for each of these chapters these chapters are not blocked at all by any member state and these chapters nevertheless don't offer and for a very simple reason because the Turkish government doesn't wish to open as for the social policy as you all know what means the social policy Turkey is Europe's record set up in terms of in terms of then workers in the working and the the very low which was pushed by the EU you know to apply is systematically delayed and in the meantime the debt of workers continue animated you can go and look at the statistics of ILO which are copied in every progress report report of the European Commission in the in October November each year competition policy in the one of the requirements of the EU to open the this chapter is for the state to stop helping the the state-owned institutions by subsidies well the Turkish government doesn't want to do that and then this chapter cannot be open it's one of the opening benchmarks and the third one is a public procurement the public procurement is over 100 billion Turkish lira which is 30 35 billion euro yearly huge budget where the government is which the government is using to to you know on a totally opaque non-transparent basis to distribute public markets and public procurement totally are in contradiction with the with the Akiko Minotel and the opening benchmark which which looks which looks for you know a transparent public bidding it is unfortunately not the case so I repeat and underline these three openable chapters are not even mentioned in the website of the Turkish Ministry of EU Athens so these are the technical problems related to the Akiko now let's have a quick look to the political non-compliance when I say political non-compliance I have in mind the example of the of Slovakia and the the the one of the former prime ministers of Slovakia Meshya who has been summoned by actually the three ambassadors of the French the bridge and the and the German visited this authoritarian prime minister in 98 I remember very well to tell them that if they continue like this they won't be in the next bunch of the of the candidate countries and this is exactly what happened in the meantime of course Slovakia had to change a government and had to comply with with the with the Copenhagen political criteria what I believe what I want to say about this is that Turkey doesn't comply with the Copenhagen political criteria anymore everyone knows this and if Turkey was not in the negotiation state or stage well I don't think that that negotiations would have started with with this candidate. So Simon Moorview has mentioned some shortcomings in terms of human rights violations I will skip the the past human rights violations especially those related to the Kurdish question recently I mean the the over what over a year now more than a year since July 2015 there has been widespread human rights violations in the towns and cities inhabited by the Kurdish citizens of Turkey entire towns and cities were raised you know to the ground and they destroyed to start with the the old Christian area of of the Armacir for instance the Sur neighborhood I mean I won't go into details of it but I would like to give you some figures which were already mentioned by Simon regarding the dealings of the emergency rule now this emergency rule has been declared of course in connection with with this attempted and thank god aborted to data this is perfect and all these conference all those who have been involved in it should be punished there is no doubt about that and the and the and the and the authorities have declared the emergency rule just for this but the consequences are are pretty far from you know being fair at least regarding the fair trial that each and every individual especially in a country country needs or requires 100 over 100,000 civil servants have been summarily fired business out of which 3,500 judiciary personnel 43,000 these figures are fresh I mean from the last weekend 43,000 people are into custody and out of out of this figure 24,000 are arrested without any any proper trial and 19 universities were closed 1919 and as well as 2100 secondary schools the reason is that all these education institutions were in one way or another related to this movement called gulen gulen is movement who is considered or declared as being behind the aborted coup d'etat 1254 associations and foundations have been in close and their properties have been transferred to the treasure together with with the spoliation of the goods of companies who are supposed to be related to the gulen is movement the figure the economists are now uttering nowadays are 12 billion Turkish lira of property transferred to the treasure 12 billion you divide by three so it makes around 4 billion euros just taken away from individuals without any proper trial just like like this in a optimum way 160 media outlets were shut down and they there are 122 journalists accused of all sorts of wrongdoings who are jailed this is definitely a record according to the committee for the protection of journalists and other human rights watchers the emergency rule will probably continue the general elections will probably be delayed they are already talking about delaying them from 2019 to 2020 which is not not tomorrow we don't know what is this why this hurry hurry and there has been 28 Kurdish mayors who have been dismissed but we need local elections to replace them no one expect any local election in a in a foreseeable future so these are the the overall situation regarding the internal challenges to the EU you know EU relationship not only your relationship by the way maybe we should talk about the western relationship of the country including NATO because which I would like to report that NATO is not just a military organization but also a political organization since 1949 well as for the external challenges I mean externally the sense that the challenges emanating from Brussels and other in the EU institutions when I say other I had in mind Luxembourg of course with with the European Parliament well I mean just few examples I mean the the commission writes progress reports about Turkey since 1998 all recent reports were negative full of little or or no progress regarding the chapters that are opened or those one not open but at least in the past few years ago there was a bright side and this bright side was about the Kurdish peace process the so-called Kurdish peace process well no more the only quote unquote bright side that the commission can still utter in the in the report is about this poor refugee deal I mean I don't have time really to go into details maybe it may come in the in the in the Q&A but this is basically where we are in terms of you know real politics but the the Turkey deal or the appreciation of Turkey doesn't of course end with the with the with the commission now we all know the attitude of President Juncker who openly and proudly announced on the 28th of October 2015 very much in connection with the so-called refugee deal that human rights violations I'm not quoting him but I mean this is basically what he said in the in front of the European Parliament human rights violation is not at all his concern or the concern of the Commission and because because the the key issue was the at the time the refugee deal and it still is the problem is that the the Council I think the the Council of the European Union is not at all in the same way of land you know when it comes to Turkey's membership recently Austria as you may know in the month of his Prime Minister but not only the Minister for NFS has announced loudly what almost all other capitals are thinking side namely to stop the Turkey's negotiation the Turkey's negotiations with the EU I mean nothing new there really I mean one should just go and look at the 18 months work plan of the three Presidents is the Netherlands Slovakia and Malta when you go in the enlargement paragraph there is no mention of Turkey so the Council is talking another you know another discourse another another way I mean not to mention of course the informal meetings that are taking since months now here and there where the freeze and the total end of the negotiations are discussed so I think at the end of the day the the relationship if we put aside the the refugee deal or which is also part of it actually you know the relationship between EU and the European Union has become an ad hoc cooperation actually exactly like for any other third country I mean the EU if it has a problem with Egypt or Saudi Arabia tackles this you know on an ad hoc matter you know doesn't go in the details of the human rights violations in Saudi Arabia or in Egypt or whatsoever so I mean this is I mean just to give you an illustration of it on the 9th of I think September yes it's few few days ago Mogherini and Han were in town I mean they were in the Inaqara they met the people and when they were in town 11 301 college professors have been summarily dismissed and this 28 elected Kurdish mayors that I just mentioned 10 minutes ago or seven in the Kurdish town have been dismissed as well no mention whatsoever very you know slight you know remarks here and there but clearly no you know no no big deal you know coming from the European representatives so I think Turkish liberals and Democrats had extreme difficulties to understand the sum of European Union institutions position and they feel literally abandoned and they everyone knew that that you know the EU had no leverage whatsoever on on EU and the transformation and the change process of the country like 10 years ago but but I mean to reach such a stage of real quantity is is considered as very much deceived and I would just mention one very latest opinion poll Turkish public opinion always was always pro-European but and then on the same time the Turkish public opinion was you know I would say clever enough or or you know sharp enough to consider that that you know this membership would never happen so the those who consider that she would never happen has risen to 70 percent now 70 70 which is which is which just really reflects unfortunately the reality so just one last word about about this you know the actual situation where anybody who doesn't please the government or the top leaders of the country you know is is is potentially you know in the danger of being arrested as we are talking now Ahmet Altan and Mehmet Altan two top Turkish intellectuals you know had been meeting with the with the with the police officers were questioning them I understand that they were they haven't answered their questions because they were accused of some obscure subliminal connection with the Gulenist movements nevertheless I would just end up by by quoting the sum of the names of 288 world intellectuals who have signed a petition for them I stop there Mr Chairman thank you Kevin Conley is director for Western Europe in the Europe Division of Foreign Affairs he is someone who has served this country in in Washington in London in San Francisco and in the United Nations in New York and has been involved also in the Northern Ireland peace process over the years and we look forward to hearing the the view from Ivy House. Good afternoon everyone and I welcome the opportunity to set out the Irish government's policy on Turkey as a contribution to today's discussion and just want to start by thanking the institute for providing the forum for important broader discussions and engagement on European and international issues which is to the benefit of of our wider public and I thank the institute for its its ongoing endeavors. I can be briefer than the previous two speakers and allow time for for question and answer and discussion because the government's position was recently set out comprehensively by Minister for Foreign Affairs and Trade Charlie Flanagan at a recent specially convened meeting at the Council of Europe which took place in Strasbourg on the 7th of September only a handful of foreign ministers attended Minister Flanagan was one of them and the Turkish Foreign Minister was also present for the meeting and so it meant that there was a direct engagement which I think was very important both in terms of conveying messages but also in terms of of making sure that the kind of conversations that are important that the European Union has with its partner countries take place in accordance with the agreements and rules which we've all agreed to and in this case the Council of Europe. The weekend before Minister Flanagan was also at the informal meeting of foreign ministers the Gimnik which took place in Bratislava and the Turkish Minister for European Affairs attended that meeting and similarly there was if I can use the diplomatic description robust engagement between EU foreign ministers and the Turkish Minister for Europe and I think I'll come back at the end to the importance of the word engagement in this context. The main points that Minister Flanagan made on these occasions were fairly clear obviously the attempted coup on the 15th of July was a criminal act and a direct attack on democracy in Turkey and the Minister expressed solidarity and sympathy with the Turkish people and condemned also the spate of recent terrorist attacks I think the situation in Turkey is so complex they were talking about some specific aspects of the situation but obviously the terrorist attacks that Turkey has suffered this last year and the large number of casualties are also a matter of international concern. The Minister was clear that Ireland supports a stable and democratic Turkey and he was very clear that we remain concerned that in the post coup situation some of the actions being taken are contrary to democratic norms the Minister summarized these in terms of the large numbers of people detained or suspended from their jobs whether they be judges lawyers teachers academics trade unionist business leaders the closure of media outlets as well as the reported conditions in which those allegedly involved in the coup were being detained that these were all matters of concern and the Minister was also clear that it was critical that legal processes take place under the presumption of innocence and that the core principles of human rights including freedom of expression and of the media which are at the heart of the conventions which we've all signed up to need to be respected the human rights and basic freedoms of minorities including the Kurdish minority were also core principles that we've agreed to Turkey and the other members of the Council of Europe. The Minister said that we understand and both in Ireland and at the European Union level the Turkey is going through a difficult time but that as friends we were saying to Turkey that it's important that they use the supports and tools that the Council of Europe provide and also that they work with the European Union in terms of the accession process and meeting benchmarks and criteria that are necessary. The Minister was clear that Ireland has been and remains a firm supporter of Turkish accession to the Union but that obviously accession means meeting clear benchmarks and criteria and Simon mentioned the annual reports and clearly before the coup there are concerns about the direction of travel in Turkey which the Minister and the Tisha have spoken about previously but obviously the post coup situation puts a whole other dimension in terms of those concerns. The Minister said we want to encourage Turkey to deal with the post coup situation in a way that strengthens democracy and the rule of law and we support Turkey in that regard. The Minister also made clear Ireland's wish that the Government of Turkey would restart the political process with the Democratic representatives of the Kurds and a view that this is a view that was stated by many EU Ministers in both discussions in the Gimnik and in the Council of Europe in Strasbourg. That kind of summary is short but there's a lot of important detail and content there but it comes down and this really I suppose leads into the question and answer session to the EU's approach and engagement with Turkey and I think at this point in time the approach that Simon mentioned at the outset of engagement, engagement, engagement is the only really serious policy option that the European Union has in relation to Turkey. Turkey is a strategic partner the importance of its strategic engagement with Europe predates the migration crisis. The migration crisis adds a whole other dimension to it but irrespective of that the long-term direction of engagement in Europe is going to benefit better from a policy of engagement than any other approach at this time. I think an example of that which again it could be debated but in the immediate aftermath of the coup when there was some discussion about reinstating the death penalty in Turkey, Minister Flanagan, many other European ministers, the Commission, Vice President and High Representative Margarini made very clear in public statements in the clearest of terms that any consideration of a return to the death penalty would be very detrimental to Turkey's relationship with the European Union and in the period since then that issue has dropped off the agenda. There are many other issues of concern but I think that is just one simple example of clear engagement on the part of the European Union which had some impact in terms of the immediate consideration of options that were under discussion within Turkey. I think I can leave it at that and happy to participate in the questions and answers but I would underline the importance of engagement thus at least for the future interests and concerns of the people of Turkey. If one takes the long view Turkey has been on an interesting journey and the decision of the European Union to enter into enlargement negotiations with Turkey as mentioned is 11 years old at this stage in terms of the launch of the accession process. It's very clear that any such process still has and in the light of recent developments a considerable way to go but the actual process of engagement on all of the range of issues that accession covers provides the European Union and Turkey with the framework for serious engagement for a long time to come and I think the alternative to engagement is not going to actually achieve much compared to what engagement has the possibility of achieving while accepting the current circumstances are not any that we would wish. Thank you very much.


Next up, we have three former members of Congress who came to join us today. I think you know their names, Dennis Kucinich, Tulsi Gabbard, Ron Paul, we're going to start with Dennis Kucinich, former member of Congress from Ohio, take it away Dennis. Thank you Nick, it's a pleasure to join Ron Paul and Tulsi Gabbard and all the other speakers and all of you at this important event. Brothers and sisters, we gather here this afternoon before this National Shrine dedicated to an apostle of healing with the recognition that we are at an epoch of American history. No less fraught than that which was faced by Abraham Lincoln but with the knowledge that our nation has survived times of division by invoking the power of spirit, the light of truth and in the words of the prophet Isaiah through making justice the measuring line. We are here today in painful recognition that our government does not have the capacity to heal the divisions in this nation or the willingness to use the basic science of human relations, sincere diplomacy to avoid violent conflict and is in fact unwilling to end conflict peacefully. Its greatest talent is to craft misinformation and disinformation to subvert the media and misuse it as an instrument to incite fear and hatred among our people, exciting partisan divisions at home through crass politics and stirring ancient hatreds abroad through lies, deceit, false flag operations and provocations which profane the very essence of democracy. In blowing up the Nord Stream pipeline this government has deliberately circumvented Article 1 of the U.S. Constitution the authority of Congress to make war. It has violated international criminal law by conspiring to commit acts of sabotage and violence on the high seas. It has used illegal and unconstitutional means to destroy the energy resources needed to protect millions of people in Europe during the winter and then to profit from it to legal actions by selling energy to Europe at a four to six times markup. It has done so. It has done so blatantly, cynically, simultaneously taking credit for the destruction of the Nord Stream pipeline and then denying any role in it. I speak directly to those responsible thanks to a courageous journalist Seymour Hirsch, thanks to a courageous journalist Seymour Hirsch. We know, we know what each of you did at the Nord Stream pipeline, Mr. President, Mr. Secretary of State, Mr. National Security Advisor and Madam Under Secretary of State and we will not rest until you are held accountable by Congress by the International Criminal Court and by the American people at the next election for your reprehensible conduct which has debased our Constitution, undermined the rule of law, in our name committed an act of war which threatened the peace of the world and a stability of our own nation. No amount of balloon militarism will distract us from your profoundly lawless, reckless conduct. Even intelligence professionals are aghast at your White House's incompetence and have lost trust in your ability to defend America. Oh, yes, you want to hold Russia to account, that will ultimately be up to the Russian people. But it is up to we, the American people, to hold you to account, to affirm that we are a nation of laws, not of men or women, to hold those in high office to the highest of standards of national international law. If we fail to do this, we have only ourselves to blame while our government descends into depravity and tries to frogmarch us directly into nuclear war. Under the pretense of the pursuit of national security, our government's aggressive nature has alienated nations of the world and caused them the withdrawal from commerce with long-term implications for the value of our dollar and our financial security. Our government has ceded our sovereignty in matters of commerce to the World Trade Organization, to the detriment of American industry and American workers. It has ceded our national sovereignty in matters of peace to the North Atlantic Treaty Organization, which prefers military escalation to peace and is content together with this administration to use the good, courageous people of Ukraine as pawns in a vicious and deadly geopolitical chess game which began well before the illegal Russian invasion. And it is now planning to do for the people of Taiwan what it has done for the people of Ukraine. Portraying China the aggressor while surrounding China with about 200 military bases. At home, our government has supported devastating gain of function research which loosed the pandemic across our land. It has perverted social media to suppress legitimate debate over COVID policy to the detriment of the health, welfare, and the will of Americans. And it has enabled the federal government law enforcement to be weaponized against political opponents and has injected itself into social media organizations to impose political and ideological censorship in a manner characteristic of totalitarian rulers attacking the patriotism of those Americans who dare ask questions. Such a government is neither deserving of the trust of the American people nor worthy of our tacit consent to make decisions in our own interests. This passage from the Declaration of Independence is compelling. Quote that when any form of government becomes destructive to these ends it is the right of the people to alter or abolish it and to institute new government laying its foundation on such principles and organizing its powers in such form as to them shall seem most likely to affect their safety and happiness. We must change this government before it destroys our nation. We must change the way we are governed insisting upon a government dedicated to peace and that dedication must be to peace at home and abroad. Strength through peace ensures our defense and our readiness by not wasting our resources on ideological warfare. I speak not as a partisan but as an American who believes we are being led to the brink of annihilation by individuals lacking in self- control obsessed with the exercise of global power and incapable of invoking the power of nonviolent persuasion. As a congressman I warned America about going to war after 9-11. I led the effort against the Iraq war together with Ron Paul and saw the lives that took the lives of at least 4491 American men and women cost this nation more than three trillion dollars late waste the country of Iraq killing at least one million innocent all because our leaders lied about Iraq and weapons of mass destruction and provoke great fear across the land for fear is a weapon of mass destruction hatred is a weapon of mass destruction our nation used to leave the world in making steel cars and ships now we leave the world in making enemies confusing defense with offense aiming ourselves to the teeth spending trillions of dollars to advance an aggressive empire through the promotion of war but the wars my dear friends have come home while our nation spends one trillion dollars every year to prepare for war millions of Americans are ill fed ill cloth ill educated ill housed without hope for the future we cannot fuel wars across the world and prevent and pretend that there are no consequences the war is inevitably come home the carnage is down the streets of our cities as millions of Americans are overwhelmed by anger despair hopelessness and unrelenting mass violence America's destiny in its founding was to be the light of the world a free and independent nation among nations not a nation above nations not a military juggernaut roaming the world conjuring dragons to slay we were to be and are to be the land of the free the home of the brave not continually locked into fear by a government made of fearful people who are afraid of balloons but instead they really need to be afraid of the American people as we come to a realization that our government has been turned into a racket by corrupt incompetent leaders this then is a call for an American revival a revival of courage of authenticity of a willingness to participate in the work of rebuilding our nation politically economically and spiritually America longs for a return to government of the people which focuses on taking care of things here at home we as a nation cannot hope to favorably influence the conduct of other nations well at least 30 million Americans are food insecure a half million homeless struggle every day to have a roof over their heads while American communities do not have clean water and while our nation has shown itself incapable of even responding to the urgent needs of those affected by the derailment disaster in East Palestine this government's this government's chilling lack of compassion and empathy is on full display not only in East Palestine Ohio but across the globe policies which lack human sympathy portend greater and greater destruction my fellow Americans it is time to revive the spirit of America so that each one of us truly believes in the ability of the nation to function for the benefit of all of us it is time to make real the dream of prosperity for all it is time to make real the dream of education for all and healthcare for all and jobs for all retirement security and safe neighborhoods it is time to revive the spirit of patriotism which reflects a daily celebration of freedom where Americans are freed from government prying and spying into their personal lives and where each of us is free to make decisions about our own lives our own health and our own beings it is time to revive the spirit of peace the scriptures say blessed are the peacemakers it is time for America to establish a new role in the world where we demand of our leaders the ability to reconcile with other nations to make peace with our brothers and sisters we must coalesce as a nation to seek and to find the underlying unity which binds us as Americans love of life binds us love of peace binds us love of country binds us brotherhood and sisterhood binds us love of home binds us love of church synagogue temple and mosque binds us love of work binds us love binds us all in a union of hope and as we revive our oneness as a nation we proclaim the deeper meaning of our first national motto e pluribus unum out of many we are one it is then we can truly unite with the rest of the world for human unity is the ultimate truth we are interconnected and interdependent with people everywhere and as nations strive for self-sufficiency so too they must strive for cooperation it is human unity which will save our planet from destruction and enable us to achieve a heaven on earth it is the realization that we are all of us created equal and entitled to self determination and self-fulfillment individually and collectively my fellow Americans this our country this land we love to whom Americans pledge allegiance must in turn pledge its allegiance to we the people allegiance to truth to one nation under God truly with liberty and justice for all let us proceed then by these words from Lincoln 2nd inaugural with malice towards none with charity for all with firmness in the right as God gives us to see the right thank you very much


Item number, SCP-613. Object Class, Euclid. Special Containment Procedures. Foundation assets are to monitor all reports of anomalies similar to SCP-613-1 and investigate if necessary. All instances of SCP-613 are to be kept in safe item storage in Research Sector 96. All individuals found to have knowledge of SCP-613 are to be interviewed, dosed with Class B amnestics, and released. Instances of SCP-613-1 are to be interviewed upon creation and contained in a climate-controlled environment for observation, experimentation, and research until such time as they cease to be viable due to spoilage. Instances of SCP-613-1 in containment are to be tagged with stickers, listing their names and the temperature at which they rose. Description. SCP-613 is a piece of brand pad paper, showing a handwritten recipe for a normal loaf of wheat bread, and the words, Wonder Bread Recipe. Please refer to this paper for optimum results. There are, at present, 10 instances of SCP-613 in Foundation custody. All instances of SCP-613 are identical. The recipe is completely identical to other common recipes for regular loaves of wheat bread. However, when a loaf of bread is created by a subject who is only following directions from SCP-613 or memory of it without consulting any other sources, the loaf of bread will become an instance of SCP-613-1. SCP-613-1 are loaves of bread created while following the directions on SCP-613. Instances of SCP-613-1 can vocalize through unknown means and achieve self-locomotion by sliding across and rotating on surfaces, and are capable of sensation and perception of their environment. Normal instances of SCP-613-1 are fully sapient, and have distinct personalities and identities unique from other instances.  However, instances that rise at non-room temperatures will have chances of developing mental disorders and or increasingly non-average IQ, with greater chances resulting from greater deviation from room temperature. There are currently no identified factors that appear to control whether the IQ will increase or decrease. Instances of SCP-613-1 separated by slicing or tearing, where the mass of the separated segment is greater than 50 grams, will form disparate identities distinct from the parent instance of SCP-613-1. Instances of SCP-613-1 produced in this manner have been observed to engage in erratic movements and vocalizations indicative of physical pain. SCP-613-1 are just as vulnerable to spoilage and other forms of damage as regular loaves, and will lose all anomalous properties when either completely spoiled or destroyed. Normal instances of SCP-613-1 do not correspond to any individuals listed in any database within Foundation access. D-Class personnel fed instances of SCP-613-1 report a taste virtually identical to normal white bread, but often express discomfort at the instances' vocalizations during consumption. Instances of SCP-613 have been sporadically appearing internationally, at a rate of once every five to seven months. Operations are ongoing to investigate if there is any individual or organization actively producing or spreading SCP-613. Recovery SCP-613 was first observed during a baking fair in Wisconsin where one baker was reportedly selling living bread to customers, prompting MTF to take action and retrieve the object, interrogate the person producing SCP-613-1, and dose all involved with Class BM nestics. Since then, more instances of SCP-613 have appeared internationally, in possession of various individuals with avid interest in baking. All individuals in possession of SCP-613 instances have refused to reveal where or how they acquired them, or claim to have no knowledge of such.


We are going to see the tax system design and tax-loving collection in the context of South Africa. We are going to have three presentations and then after that we are going to have the discussant who is going to bring up the new common idea about all those three presentations. Maybe a couple of things before we just have the first presentation. My name is Imabre Salimana. I am a research fellow at UNU Ida. I am working at the SATI program based in South Africa. Just a little bit introduction about this session where we are going to see the tax system design and tax-loving collection in the context of South Africa. Much is known about the South African economy where we have issue of unemployment and inequality. This is most common critical issue in South Africa. This program has a big implications in terms of the development, in terms of the job creation, in terms of investment, and there are some other issues like roadshedding and others. All this has massive negative impact for the development. The police makers in South Africa, they try to bring in some different programs so that they can make sure that they can have different lovin services, including internal domestic mobilization. This is why different programs, research development have been putting in place to be able to help the police makers to have a concrete and efficient ways to correct tax revenues and help to minimize the economic loss in the country. In this session, we are going to have the first presentation by Professor Nadine, who is the director of the Institute of Public and Regional Economics at the University of Monster. This is also one of the workstream leads at ASEA Tired Program. This is the program we have, a tripartite program between National Treasury, South Africa Lovin Services, and UNU Ida, where the tax data lab was established at National Treasury in collaboration with SAS to bring in those big data sets to help the researchers to provide relevant evidence-based research. So Nadine plays a key role in the development of one of the workstream on domestic revenue mobilization. Welcome, Nadine, for the presentation. Okay, so thank you very much. It's great to be here and present you a new paper that we currently develop in the context of this ASEA Tired Program that Imabla just mentioned, and it asks the question, what happens when you tax the rich and its evidence from South Africa? So background and motivation for the study is that in general, when you look at less developed countries, there tend to be in many of those rising levels of income inequality that has sparked in these societies discussions about potentially increasing the tax levies on high-income earners in these countries. And if you think about the implications of that type of policy reform, then the promise that this holds is that you may increase revenue collection in these countries, and many countries struggle with low tax-to-GDP ratios, and simultaneously may reduce after-tax inequality. The downside, of course, is that there may be efficiency costs, and these efficiency costs may be high, especially in lesser developed countries. Why? Because high-income earners may have many options to evade and avoid taxes, and commonly these countries are characterized by lower tax enforcement capacity than more developed economies. And if you think about real responses, so here you tax potentially the very high income, very high-skilled individuals in the society if they reduce their labor supply or their effort provision that may have real economic consequences that may potentially be more detrimental than what you see in developed countries. So if you think about the responses of taxpayers to this type of policy reform, it's really first order in terms of importance for policy discussions, whether you want to do this type of reform to understand how taxpayers react, and this is the context of the study. So we look at South Africa and South Africa in 2017, so in February 2017 the government announced to increase the top marginal tax rate in the personal income tax scheme from 41 to 45%. And this treated the very upper end of the income distribution. So the 0.5 top income earners in the country were affected by this reform. So income earners or incomes above 1.5 million rounds were affected. And the government said what we want to achieve with that reform is exactly what I just gave you and the motivation they wanted to raise revenue collection from the personal income tax and they wanted to decrease after tax inequality in the country. And the question is just did that work out? So to give you a bit of context, what you see here is a graph that plots you on the vertical axis, the top marginal tax rate of countries. So each of these acronyms is a country and on the horizontal axis, the gross domestic product per capita. And what you see is there's a positive correlation. So better developed countries tend to levy higher marginal tax rates on income earners presumably because they have more tax enforcement power or better systems like in terms of third party reporting that just helps the tax revenue authority to really enforce these high top marginal tax rates. And South Africa is the red dot and what you see is that even before but more clearly after the reform the top marginal tax rate was quite high or is quite high for a country of that development stage. So in terms of which individuals were affected, so the reform as I just said affected the very top end of the income distribution in total a bit more than 80,000 individuals were affected by this reform. This is a small fraction of the total taxpayer population in the PIT system but this population contributes a massive fraction of the total revenue collection, 22%, so it's 0.6% or 0.58% of the individuals that are treated but they in total contribute 22% of the personal income tax revenue collection in the country. So this is arguably relevant from a revenue collection perspective. So what we aim to do in this research paper is in the first step to understand in a broad way what these individuals did. So they were treated, they faced a higher top marginal tax rate and the question is how did their tax income reporting change because of that reform? And this is very difficult to identify empirically so if you think about it then one quick approach might be to say okay I just look at changes in income reporting of these treated taxpayers relative to some controlled taxpayers that have lower levels of income and are therefore not treated. And the problem and this is what you see here in this graph is that the income trends are very different at the upper end of the income distribution and at the more lower in the middle of the income distribution. So what we see in South Africa and other countries as well is actually income trends that are reflected here in this graph. So you need to understand the graph so on the horizontal axis it's just the income level and on the vertical axis it's the income trend. So how does the income trend over time correlate with your income level at a certain point in time? And the correlation is actually negative so if you focus on the blue graph and it's also negative in South Africa what we observe is that at the upper end of the income distribution the income trends are smaller than at the lower end of the income distribution and the reason is mean reversion. So we have a lot of mean reversion in the data so people may in one year have a very high income and then they revert back to the mean in the next year. And so what you see here is these underlying income trends are very different at the upper and lower end of the income distribution. So our empirical identification strategy now what we do is that we say we take a pre-reformed period to identify the blue line so there was arguably no change in the PIT system and that period we use to model differences in income trends at the upper and lower end of the income distribution and then we look at the reform period and this is what you see here in red and in the reform period the reform effect kicks in and what we would expect is that individuals at the upper end of the income distribution may actually reduce their taxable income reporting because of this tax shock. Okay so this is the strategy and what we use in terms of data it's the universe of personal income tax returns from South Africa for the years 2011 to 2020 and this information combines the actual PIT returns so the tax returns that the individuals submit and pay information submitted by employers so third party reported income information and as dependent variables we use two income concepts a broad income concept and then actual taxable income after deductions that the personal income tax system allows. So what you see here is just pure descriptive revenue collection in the PIT system in South Africa across tax years starting in 2011 until 2020 so the blue line gives you overall PIT revenue collection and the red line gives you revenue collection from the treated taxpayers so taxpayers above 1.5 million round income and the reform so the first treated year was the year 2017-2018 which is indicated as 2018 in my graph and what you see is looks pretty flat so what we had is we experienced this increase in the top marginal tax rate but if you just descriptively look at the data this does not show up like in a take up and tax revenue collection from this group of taxpayers so here in this table in the first line you see the number of individuals that report income above 1.5 million round over time and if you look at this line and the first this number then you see it goes up until 2017 and then the number of individuals with more than 1.5 million round of income tends to drop and the second line gives you how much taxable income do these individuals report and you equally see a drop in 2018 which already descriptively points to a taxpayer reaction that they might reduce their taxable income in response to the reform so here again you see the graph with my empirical identification design and here you see the estimates from South Africa based on the real data so the blue lines again to understand the graph so on the horizontal axis you see the taxable income in a pre-period and taxpayers with more than 1.5 million round of income they are treated and the blue line gives you a pre-period so in the base this is the period between 2012 and 2015 so it's always a three-year gap and taxable income change of taxpayers in different percentiles of the income distribution and what you see here is this declining trend that I also theoretically show you driven by mean reversion that we see in the blue pre-period and red is the reform period so this would be the period between 2017 so pre-reform until 2020 and the tax year 2020 is not affected by COVID so this is prior to the COVID outbreak and what you see is that in the we call that validation region so taxpayers below 1.5 million round of income these curves overlap so you see that the income trends are very similar in the pre-reform and the reform period and in the treated regions so taxpayers that were treated by the reform you see that these curves diverge which is suggestive of a response of these taxpayers to the reform and this is broad income and you see the same type of pattern if you look at taxable income and account for deductions in the tax system so this translates and this slide is more for the academics in the room this translates into a substantive elasticity of taxable income in the South African economy this elasticity of taxable income tells you if you increase the net of marginal tax rate by 1% by how many percent does the taxable income reporting increase so here we need to think in reverse it was like a reduction in the net of tax rate by how much does the taxable income in your economy is reduced and the first this is again talking to the academics in the room the first column is a reduced form estimation the second column is an instrumental variable estimation where we instrument the actual change and the marginal tax rate that taxpayers face by the policy induced change by this policy reform the increase in the top marginal tax rate and this elasticity is very high so that means that these taxpayers reduce their income by 10% around 10% in the treated region so now you may have concerns about this approach and may say ok perhaps something else happened perhaps there there are just changes in these underlying trends over time at the top end and the lower end of the income distribution and in the paper like one strategy to avoid this type of bias is just to look at so-called placebo tests and say we look in the pre-reform period and just in the pre-reform period ask ourselves over time do we see that this red and the blue graph over time does it change and we do not see any systematic changes over time in the pre-reform period which kind of substantiates that what we see here is really a reform driven effect driven by the increase in the top marginal tax rate so what the graph that I showed you initially already suggest is that this response increases across the treated taxpayers so what you see here is this is only the treated group and this tells you what is the elasticity of taxable income so how elastic do they react to the reform across the treated regions in the upper the 10 would be individuals in the very upper-decile of the treated region and what you see is they respond more strongly the higher up their income so high income individuals within the treated region respond more strong and then one thing we are really excited about in this project is that the richness of the data really allows us a bit to dig into how do these taxpayers respond and how do we see a response and over all taxable income and of course kind of the question is how do they respond is this in which income component is this evasion is this avoidance is this a real response and of course for the country it's very relevant to get an answer to their question and how to think about this policy reform so what you see here is just the distribution and the composition and not the distribution sorry the distribution of income taxpayers so 1,500 this is the 1.5 million individuals and what you see is just what type of income do they earn and normal income would just be IRP5 income so pay income reported by employers to net of in yellow allowances and then orange fringe benefits so this is also reported by the employers and what I found interesting is that these income earners they report relatively little business income this is different in other countries so at the very upper end of the income distribution you commonly see higher fractions of income earned by business income so we still want to dig into that so we haven't understood that very well but and this is like interesting descriptively and investment income plays some role at the level of the relative to normal income it's like not huge huge okay so here this might be one of the most interesting tables at least to me from this paper is so here we look at responses in different income components and the first line gives you responses and pay income so IRP5 income net of fringe benefits and allowances so the elasticity is 0.26 or 0.41 which is a response but not like massive it's not the one that we saw in overall taxable income and then in the next line you see gross income of these taxpayers minus this third party reported employer income and there you see like a massive response so the response is driven by income that is not covered by third party reporting or even remitting of the employers business income does not show a response so business income does not play a major role and we have not I think we need to look deeper but if we look like in a plane where we do not see like a massive response of business income we see a quite substantial response of investment income we see a bit of a response in deductions this is actually quite interesting in the study per se of taxable income and this may relate to the design of the South African personal income scheme where deduction is relatively simple with relatively few deductions and so deductions are commonly perceived to be one and how taxpayers respond to these types of reforms and what we see is even in a system which is very lean with relatively few deductions we see a strong taxpayer response here in this context and fringe benefits and allowances also respond quite a bit this allowance response is driven by different types of allowances there's like one category other allowances this drives this a bit and yeah so this yeah so this is like the main takeaway here so this is the top of the income distribution and shows you like the last interesting finding I can convey for today and shows you in terms of if I only look at the income that these individuals report how it is actually composed between monthly income so that the income that individuals get every month and annual income this is in red and this would be bonus payments or incentive payments so this is payments that people get like once a year and then commission and this graph is in to show you that this annual income and so bonus and incentive income is quite important at the upper end of the income distribution and if we check how these income components react we see essentially nothing in monthly income and a quite substantial response in annual income and this is consistent with prior findings in the literature that suggest if these very top individuals face higher tax rates they may reduce the effort provision and may not be as successful in achieving their targets within the firm as before and this means that might be a real response that you see in the economy so asking is this like avoidance evasion or is this a real response I guess this is the result that most looks like a real response in our study and then we link this to the firm side so essentially if they really show this type of behavior then it might end up showing up for the firms as well so we basically match our personal income tax returns to the corporate income tax returns and look at the fraction of tax payers within these firms that are affected by the reform and then ask ourselves do we see like a reduction in output and activity of these firms and the good news is there are not many firms treated in the economy so it's one tax payer that is treated by the reform it's only like 1.5% of the firms that are treated and we see a bit of a reaction which is quantitatively, relatively modest however so this would be sales of firms of different size in the economy that are treated and we have different treatment indicators and the fraction of tax payers that are treated or whether a firm is treated at all and we see like a 3% reduction in output in response to the reform so this looks a bit like a real response it's arguably quantitatively not massive but I think so what we think is interesting here is that you see the richness of the data that allows you to track these types of reforms and also control for confounders of course you may think these firms are very different that are treated from other firms but we can absorb like differences in industry trends differences in firm size trends here and still the effect shows up okay then you can think about what happened to revenue collection and inequality in the country so this would be revenue collection so what you see in the upper line is if the tax payers would not respond to the reform so static just the marginal tax rate increases what is the additional revenue collection that you have in the economy and then you would collect around $8 billion more in taxable income but we see this massive response by the tax payers which essentially suggests that South Africa collected less revenue because of the reform because of the strong reaction what about inequality inequality may have dropped so here you see the Gini coefficient in 2017 if you just account for the tax change the drop in the Gini would be from 0.626 to 0.618 and if you again account for the behavior response you get an even stronger reduction in the Gini coefficient you need to keep in mind that not all of that is plausibly a real response much of that is avoidance or evasion so this might just be reported income inequality not actual income inequality however if you think there are evasions or avoidance costs if you think about consumption inequality that may have dropped so summing up so what we find is the tax payers responded quite substantially to that reform we see that the response is centered around income that is not subject to third party reporting with the exception of this incentive and bonus pay it may have some had some mild repercussions on the real economy and likely it did not increase revenue collection in the country thanks for listening


This is a chance for me to not just make the announcement that we're getting two and a half million dollars for this project. That is the result of a lot of effort that we're all making in Harrisburg to try to create the environment for the best single social policy we could do, and that is create family sustaining jobs. If you work back from what it's going to take to create that family sustaining job, it's things like this. This is five to six hundred new permanent jobs that are going to be good jobs for people of Pennsylvania, and I'm proud to be a partner with all of you in making this happen.


Now, we want to see another question where we involve right issues because right issue is basically issue to the existing shareholders and issued at below the market price to see how the right issue will affect the earning per share. Basic earning for 2019 is 1.8 per share income for the year 2020, 230,000. So, the earning for last year is given because whenever you have a right issue, you have to adjust the earning for last year. There are many other things that you have to adjust in 2019. The company has 100,000 shares in issue, currently 100,000. On 1st July 2020, makes 1 per 5 right issue. The company issued a right share in exchange for every 5 ordinary shares. You should understand that this is a pre-emptive right. If you want to buy a new share in the market, you will offer existing shareholders first. The existing shareholders will only buy your share when you give them a little incentive that they will give below the market price. Otherwise, they will buy from the market. So, look here. At a price of 1 rupee, the market price of the last day of the quotation was 1.6. In the market, your share is also 1.6. And you are offering them 1 rupee. So obviously, they will prefer to buy the share. And you cannot sell this right share to the outsiders. No, right share means to the existing shareholders. The requirement is to calculate the earning per share. So, look here. If there are right issues, additional calculation is required and which is called theoretical x right price. It means that before the right, what was the price of your share? And after the right issue, what is your price? Why we call it theoretical? Because practically, the market will be different in the stock exchange. What is the difference? We have to look theoretically at the theoretical price of our share. So, it is a simple calculation. In exchange for 5 shares, there is one right share. So, the market price is 1.6. So, the market price of 5 will be 1 rupee. And the right share you issued, 1 share is 1 rupee. So, it will be 1 rupee. So, the total is 9 rupees. And how much is the share? 6. So, your theoretical x right price is 1.5. So, the fraction right issue is 1.5 over 1.6. You can take it as a number and so on. Now, the fractions to be used to adjust the comparative earning per share. See, look here. Initially, you got 100,000. Then, you have the right issue of 20,000. Total comes to 120,000. Then, weighted average number. Because initially, you have 100,000 after 3 months. That is, you issued in April. So, in 3 months, it will be 1 lakh. But the remaining 1 lakh, 20,000, you have to go for 9 months. So, if you take out the average of 9 months, it will be 1.5. 11500. And the earning of 2020 will come out. 230 divided by 115, which is 2 rupees. And the last year's earning was 1.8. If you fraction it, it will be 1.6, 8, 7, 5. Or if you take it out from the fraction, it will be around 1.7. So, this is how the right issue affects the earning per share. Usually, it reduces. Thank you very much.