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Russia’s wartime economy: learning to live without imports

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One August afternoon, a taxi pulled up to a hotel in Istanbul and a group of men got out, speaking Russian. They pulled five suitcases out of the car.

The cases were packed with equipment they had purchased in Austria. The goods were not particularly unique — professional electronics, for use in schools — but they were made by a western brand that had decided to boycott Russia over its invasion of Ukraine.

“It was made to look as if it’s just for personal use . . . As if I’d bought it all for myself,” says Stanislav, who met the men at the hotel in Istanbul, took them out for dinner, and then flew home to Moscow with the cases.

“Of course, it was contraband, pure and simple,” he says, speaking on condition of anonymity due to the illegal nature of the activity.

This was an unusual consignment for Stanislav. Normally he specialises in using trucks to smuggle out of Europe the much bulkier and more sensitive items that are subject to sanctions on Russia, such as materials for the construction sector and parts and machinery for heavy industry.

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Russia’s wartime economy

Coming tomorrow: In the second part of this two-part series, FT reporters look at how Russia’s technocrats became Putin’s enablers

Stanislav is one of a growing number of Russian so-called import-export specialists — experts in finding loopholes and getting goods through customs — that have cropped up in response to western sanctions on the country.

Interviews with participants of this underground market reveal a lucrative but highly unpredictable and unstable trade, one on which Russia’s beleaguered economy will struggle to rely on.

And yet, increasingly, rely it must. Sweeping sanctions introduced since the outbreak of war have roiled Russian supply chains and left many companies scrambling to source crucial foreign-brand products and parts.

When the heaviest sanctions were introduced in March, some economists predicted a rapid collapse in the Russian economy, perhaps by as much as 30 per cent. But that did not happen: oil and gas revenues continued to flow in and the currency soon recovered.

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Instead, what is emerging is something different — not a dramatic decline, but a steady degradation of its productive capacity which economists in both Russia and the west argue is pushing the country back decades. Russia is trying to operate a modern economy without the ability to import many of the components, raw materials and technologies on which it depends.

The impact is being felt across the economy — from the banks that need servers to process payments to the country’s poultry industry, which had relied on the Netherlands as a supplier of the chicks from which broiler hens are grown for the mass production of eggs.

Agricultural firms are struggling to source tractor tyres, while airline companies are unable to secure foreign components to repair their planes.

The hit has already been significant. Data from Russia’s trading partners shows Russian imports have dropped by 20-25 per cent since the start of the war — a blow for a country embedded for decades in the global economy.

“If you look at pharma, chemical production, machine building, metals and mining . . . It’s hard to find an industry in Russia that is not reliant on imports for at least 50 per cent [of inputs],” says Elina Ribakova, an economist at the Institute of International Finance.

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In the medium term, the sanctions are likely to set Russia’s economy back years. Consumers will be forced to readjust to a more limited choice of goods and poor product quality that could echo the privations of the late Soviet era.

“Life will be simpler and there’ll be less money. People will make do with less. There will be more paper in the sausage,” says a Russian oligarch who is under sanctions.

“It’s going to be like this for 15-20 years, unless [President Vladimir Putin] dies. Fundamentally nothing will change.”

Ultimately, Russia’s long-term economic future depends on whether Moscow will be able to rapidly produce domestic alternatives to the foreign goods it can no longer access, or source analogues from “friendly” countries such as China. Where these two options fall short, it is left to rely on contraband imports by smugglers such as Stanislav.

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For him, the new restrictions have created a land of opportunity. In the past, foreign goods were shipped to Russia by official importers, and there were few ways for a new player to squeeze in. Trying to import brands illegally was also no use, as there was little demand.

“I could have stuck the goods in a double-bass case and brought them in, but no one would’ve bought them, because I couldn’t have offered the buyer an official warranty, and so on and so forth,” says Stanislav.

“Now I can import this, I can import that, just like everybody else. So for me, of course, it’s interesting,” he adds. “The doors have opened.”

‘It is all being imported anyway’

Several smuggling routes have already become popular.

Mostly, Stanislav buys items through front companies set up in Europe, with no visible connection to Russia. The products are then sent in trucks from the EU to one of the former Soviet Union countries that share a customs union with Russia, such as Kazakhstan and Armenia.

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“Any brand that has left Russia, no matter what it is — vacuum cleaners, clothes, alcohol — it is all being imported anyway,” says another Russian national based in Europe, who is engaged in the import-export trade.

But the process is patchy at best. Take the example of clinker brick, a material used, among other things, in decorative facades.

“The last deliveries were in June and that’s it. No one knows how to bring it in,” the person explains. Some builders involved in high-end construction have already tiled half their building, he says. “What to do with the other half? It’s not clear.”

Eventually, routes will be found to get the material to Russia, but as with many other imported goods, it will be expensive, and hence only available for specialist orders, the person adds.

Russia classified data on its imports soon after the start of the war, but economists are building a picture using information about exports to Russia from its main trading partners. This shows a steep decline in the spring, immediately after Russia’s invasion of Ukraine, followed by some recovery towards the autumn.

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Exports to Russia from the US were down 85 per cent in May compared to the same month the previous year, according to the European Central Bank’s research. The World Bank, IMF and other institutions forecast Russian imports this full year to be down by a quarter on the previous year. During June to August this year, Russia imported $4.5bn less per month than in 2021, according to the Kiel Institute for the World Economy.

Import demand has also fallen as the economy entered recession and inflation began to squeeze household incomes, while an increasing number of western companies that had branches in Russia pulled out.

Given the shortages of imported parts, car production has been one of the hardest hit sectors, with output down almost 80 per cent in September compared to the same month the year before, according to Russian state statistics service Rosstat. The slump led officials to loosen some safety requirements over the summer for antiskid brakes and safety cushions.

So many western automobile makers and sellers sold off their Russian businesses that only 14 carmakers were left on the market for Russian buyers, according to an industry analysis published in December. All were Chinese brands, except for three domestic brands, including the iconic Soviet Lada.

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One billionaire close to the Kremlin says the potential profit on smuggled items was so high that luxury goods would always make it into the country, regardless of sanctions. He says that over the summer he bought two Maybachs instead of the Mercedes he wanted but could not source. If the first broke down, he adds, he could use the second one for parts.

Others have already spied new opportunities. “It’ll be tough for two, three, four years. Then we’ll adapt,” another oligarch under sanctions says. “Look at Iran. They do everything themselves [ . . . ] they have their own supply chains, and if they don’t have a spare part, they get it on the black market. They can do anything. We are learning our lessons right now and we will eventually be like that.”

A collapse delayed

So far, the economy has avoided the worst predictions. Economists are estimating a decline in gross domestic product of between 3.5 and 5.5 per cent this year.

Partly, this is because export revenues have remained strong, and Russia is increasingly finding alternative buyers for its oil.

There has, for example, been an uptick in exports to Russia among the countries through which some businesses are rerouting trade. Exports to Russia by countries such as Turkey and Kazakhstan are up. While the EU exported 43 per cent fewer goods to Russia during June to August, China exported 23 per cent more, according to Kiel Institute.

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But while there has been no disintegration of the economy, analysts believe that long-term growth will be substantially depressed, as import curbs shred the potential for technological upgrades. The local industries that end up replacing production are often more inefficient, they say, while black market import streams are volatile.

“If you go back to the Soviet Union and how they got hold of technology, it was through the FSB and spies and fronts, buying things in third countries undercover,” says economist Jacob Nell, member of an expert working group on sanctions run by former US ambassador to Russia Michael McFaul and Andriy Yermak, Ukrainian president Volodymyr Zelenskyy’s chief of staff. “But it’s very difficult to build up supply chains when you have these sorts of comprehensive sanctions.”

Nell adds: “Even if you can steal the blueprints, it’s very difficult to replicate — in an economic and commercially sustainable way, without subsidy — the production of these things.”

Stanislav agrees. Shipments are volatile, and intermediary countries are introducing new rules intended to weed out this kind of trade. Earlier this month, the EU has proposed making sanctions evasion a criminal offence and he immediately felt a massive drop off in suppliers. One of his deliveries got stuck at Kazakhstan customs.

“A loophole was found, and then, thanks to connections and a small bribe, we found a way to move the stuff,” he says. Still, “it’s getting harder and harder every day”.

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Across the board, state enterprises and agencies are searching for ways to respond to the import breakdown.

In July, Putin appointed longtime trade minister Denis Manturov to a senior government position with a mandate to restore supply chains. Manturov vowed to uphold Russia’s “technological sovereignty” and make import substitution “a matter of national security”.

Though Manturov later insisted this would not mean “totally abandoning market economy principles”, the drive to boost domestic production will inevitably lead to much more heavy-handed state intervention that limits competition, according to another Russian oligarch under sanctions.

“If you have 10 companies making plates it won’t work. You have excess supply and not enough quality. Nobody needs that,” the oligarch says.

“Instead, you need to make sure that you have just a couple of producers. They need to keep competing with each other and produce a quality product, but you want to avoid excess production. You need to be sensitive to the size and power of the market.”

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Some solutions have already been found. A survey of Russian companies by the central bank in April found that two-thirds were struggling with disrupted supply chains. By the summer, that number had decreased to 50 per cent.

“So for companies that are looking for alternative suppliers, there is marginal improvement,” says Ribakova at the IIF, referring to the survey. “But on the other hand . . . these are aggregate numbers. They do not reveal the choke points.”

The critical list

In a new underground complex known as “the bunker” next to Moscow’s Ukraina hotel, Russia’s cabinet regularly meets to discuss presentations dissecting the country’s dire economic prospects on an enormous 180-degree screen.

One of those presentations, prepared by a major state-owed bank from August this year and also seen by the Financial Times, lists some of these critical areas.

In five columns it grouped sectors by their degree of risk, with the last coloured in red and labelled “super critical”. Industries listed in this category include aeroplane construction, pharmaceuticals and medical tech, production of microchips and high-level IT equipment, and tech for spacecraft construction.

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The cabinet claims it has already successfully replaced imports in some of the sectors. “They wanted to ground our air fleet. To take the sky away from us,” prime minister Mikhail Mishustin said in November at a time when there were multiple reports in local media about how airlines were struggling to source spare parts. “But we have kept our planes and are expanding the release of domestic technology.”

One way Russia’s government has stepped in to support importers, especially of consumer technology goods, has been through the legalisation of what it calls “parallel imports”.

The law made it legal to pass a long list of western-brand goods through customs into Russia without the consent of the brand itself. Previously, this would have been considered piracy, but is now Stanislav’s semi-official trade.

The government has estimated that $20bn worth of goods were imported into Russia this way this year, including the new iPhone 14, released in September and not officially for sale on the Russian market. “If consumers want to buy these phones, you’re welcome,” Manturov said in September.

Kirill, another imports specialist in Moscow, opened a grey imports business focused on furniture and fixtures soon after the start of the war. He says that one of the most common schemes for parallel imports is to work with a company in, for example, Kazakhstan, that has an existing relationship with a western brand.

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This company then places its usual orders, but in significantly larger volumes. The Russian partner quietly pays to import the excess to Russia, which is easy to do once the goods are safely in Kazakhstan, since it has no customs border.

But the grey market route is less effective for harder-to-source imports, particularly microchips and servers, according to an executive at a Russian technology company.

“You can’t make it a mass [business] because banks need servers too” and will outbid smaller buyers, the executive says. “That makes it much more expensive and not sustainable.”

Producers have become much more wary about the increased volume of orders for microchips in Armenia and Kazakhstan, which have become home to large communities of exiled Russian IT specialists since the war but are also hubs for customs-free parallel imports ordered through fronts.

“Some US companies stopped shipping to Armenia. They say, ‘We had one licence a year before. Now you are asking for 100 licences? Fuck off!’” the executive says.

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A senior executive at a major Russia technology company warns about the long-term impact of the microchip shortage.

If the sanctions last two to four years, paying for the most ubiquitous chips at twice the market price is still worth it, the executive says. However, if they last for longer, the executive believes Russia will be forced to switch to inferior Chinese chips. Expanding Russia’s own microprocessor production capacity to the level of China — itself now struggling under US export restrictions — would be likely to cost $50bn a year for 10 years, and even then not be guaranteed to work, the executive adds.

To go through the complex compliance procedures required to demonstrate customers are not avoiding sanctions, some manufacturers require their customers to prove they are physically not in Russia while placing an order, the executive adds.

“You want 10 mainframe servers to Gyumri?” the executive explains, referring to a city in Armenia, another parallel imports hub. To prove it, “you go on Zoom with a procurement officer to show him you are in Armenia and you have people in the office.”

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Even Russian government organisations are turning to parallel imports as a result of sanctions. Stanislav says he had been approached by two different regional Russian chambers of commerce, one located in Siberia and the other in central Russia, asking him for help sourcing foreign goods that are under sanctions or an embargo.

“They turn to us entrepreneurs and say: ‘Guys, can you bring us this? Can you import that?’”

The do-it-yourself economy

Soon after the first sanctions packages were introduced, Grigory Bolotin, head of the Cheboksary Power Machinery Plant, got his team together around a large blank sheet of paper, and began to draw.

He plotted out a huge map of his business — a vast factory on the banks of the Volga river, east of Moscow, that produces forklifts, tractors and other heavy machinery — and traced all of the supply chains on which it relied.

Quickly, the team spotted the areas too dependent on western parts. Those product lines had to be suspended.

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In other areas, they got creative. Where they used to import microchips to run their tractors, they decided to try making their own. They bought basic transistors and other chip parts in Asia, and learnt how to solder them themselves. “It turns out . . . fairly simple, but it does the job,” says Bolotin.

For other key components they found domestic replacements. The Japanese motors used in their forklifts were swapped out for alternatives produced in Minsk, capital of Russian ally Belarus.

“Of course, the Minsk engine is noisier, less economical, less reliable. But it’s there, it’s available. And everyone has kind of gotten used to it,” says Bolotin.

Overall, they managed to make do. But Bolotin could see the wide-ranging effect of import curbs on quality and technological level.

Cheboksary’s products were once considered to be of average quality. But since the sanctions were imposed, they have “moved into the upper segment of the market”.

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“We will probably not be able to produce equipment of the same technological level as the products that were supplied by western countries,” Bolotin says. But right now, he said, Russian customers don’t care.

Economist Branko Milanovic has labelled this process a “technologically regressive import substitution”, replacing imported goods with “inferior, old-fashioned domestic substitutes”.

The economies of scale that came with importing raw materials and components are being lost.

Ribakova at the IIF explains: “You will be able to produce it, it will be just much more expensive, because it’s inefficient.” She adds: “If you’re a factory in Russia producing buttons for half the world, your unit cost of production is completely different from having to produce a limited number of buttons for a specific production.”

For example, Finland was a key exporter to Russia of chemicals that are used in bleaching paper. After its shipments stopped, several Russian pulp mills had to learn to do without or have started producing the bleaching chemicals themselves. The Soviet Union was also self-sufficient in these products.

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But one result of using no or lower-quality chemicals is that some of the paper used in Russian offices has been coming out a sort of greyish-brown.

A deputy industry minister insisted earlier this year there was a silver lining, citing new findings that show overly white paper can damage your eyes. “Really shiny white office paper is actually bad for one’s health,” he said.

Data visualisation by Chris Campbell


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How to Reduce Your Personal Taxes?

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tax income

Basic tips for Singapore tax residents
Whatever Year of Assessment (YA) it is, we should start considering our personal tax strategy early. In Singapore, one of the most expensive cities in the world, financial management can be an important tool for survival, and proper tax planning is an integral part of this.

Should tax planning be exclusively for high net worth individuals (HNWIs) with vast assets? As long as you are required to file a tax return, you need to do tax planning. It’s worth noting that your personal tax obligations affect your disposable income and proper tax planning can translate into significant savings in the long run.

Here are some basic tips to reduce your tax burden. However, please note that they are all general in nature. If you have more specific questions and/or concerns, please schedule a consultation with us.

Claim the relevant tax credits and rebates

Personal tax rates in Singapore are progressive, starting at 0% and ending at 22% (YA 2018) for annual incomes above S$320,000. There are a number of reliefs and allowances that allow you to save on your personal taxes.

Tax credits against your assessable income are given in recognition of your contributions to areas that are in line with government policy. For example, certain allowances are available to support parenthood and family formation, care for elderly parents, upskilling, national service, etc.

Some of the reliefs you can claim include, but are not limited to, Spouse Relief, Child Relief, Parental Relief, Earned Income Relief and Foreign Maid Relief. All are subject to certain conditions.

Top up your CPF (Central Provident Fund)

The CPF Minimum Top Up Scheme allows you to claim tax relief when you top up your CPF savings. You can also claim relief if your employer does the topping up.

This also applies when you top up your family members’ retirement account or special account for additional relief, provided their annual income does not exceed S$4,000 in the previous year.

For cash top-ups under S$7,000 made by you or your employer, you are entitled to a tax credit equal to the top-up amount. For cash top-ups of S$7,000 or more, your tax credit is limited to S$7,000.

For top-ups you make to your sibling’s, spouse’s, parents’ or grandparents’ CPF, you can claim additional relief equal to the cash top-up amount, which is capped at S$7,000.

The CPF top-up allowance you can make annually is S$14,000 (maximum).

Contribute to the SRS (Supplementary Pension System)

The Supplementary Retirement Scheme (SRS) is a voluntary scheme that encourages individuals to save for retirement beyond their CPF savings. Contributions to the SRS are eligible for tax relief, which will again be deducted from your taxable income. Investment returns are tax-free before withdrawal, and only 50% of SRS withdrawals are taxable at retirement. For Singaporeans and Singapore Permanent Residents, the maximum allowable contribution is $15,300 – YA 2018 per year, while the ceiling is $35,700 – YA 2018 for foreign Singapore work visa holders.

Voluntary contribution to your Medisave account

Claim relief on any income earned in the year your voluntary MediSave contributions were made. This method will help you reduce the amount of taxes you have to pay while saving for your health care needs.

The amount of relief allowed for voluntary Medisave contributions is limited to the lowest of the following: (1) Voluntary contributions specifically to a Medisave account; (2) Annual CPF limit minus the mandatory contribution by you and your employer; or (3) The prevailing Medisave contribution cap of $48,500 ($49,800 – YA 2018) less your Medisave account balance before your voluntary contribution.

Make a charitable donation

In Singapore, donations to any approved Institution of Public Character (IPC) or Eligible grant-making philanthropic organization are tax deductible.

In general, you will claim a double tax deduction (ie, double the amount of the gift) for gifts that fall into any of the following categories: (1) monetary gifts; (2) share gifts; (3) computer gifts; (4) donations of artifacts; 5) a public system of tax incentives for art; and (6) gifts of land and buildings.

The government will promote or discourage certain activities according to the economic situation and social benefits to fulfill the national benefits as a whole. By donating to charity, you not only do a good deed, but you also significantly reduce your tax liability. For example, donations made between 2009 and 2018 that meet the double tax deduction criteria will be temporarily entitled to 2.5 times the tax deduction.

Apply for the Not Ordinarily Resident (NOR) program.

Enjoy a period of 5 years of tax benefits (YA) if you qualify under the Not Ordinary Resident (NOR) scheme.

You must meet both of the following criteria: (1) you have not been in Singapore for 3 YAs prior to the year you qualify for the NOR scheme; and (2) you are a tax resident for the YA in which you wish to qualify for the NOR regime.

Rental expenses can be deducted from rental income

Rental income is taxable, so related expenses are deductible.

Examples of such allowable costs are: property tax, mortgage interest, fire insurance, maintenance fees to the governing body or general repair and maintenance costs. Check the following: rental expenses are deductible if incurred: (1) solely for the purpose of generating rental income; and (2) during the term of the lease.

The above are general tips to reduce your tax burden in Singapore. It is always better to plan before the end of the basic period. If your tax situation is unique or if your needs are more specific, consider consulting with a Singapore tax specialist.

JC has over 20 years of experience, including 14 years in senior management positions for small to some of the largest companies across Asia. He helps more than 30 companies from various industries and takes care of a number of CEOs and top managers. Transformation of digital business, first-class management and with multidisciplinary fields. With sets of unique business frameworks, JC helps clients grow their companies to where one of the startups is now valued at SGD 30 million.

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Commuters from the Southwest threatened arrest at Christmas in a viral video

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Southwest Airlines He already had it Terrible end of the year After a massive winter storm forced it to cancel flights that had outsold its industry competitors. Then, somehow, the PR nightmare got worse.

At Nashville International Airport on Christmas Eve, a police officer threatened to arrest stranded Southwest passengers if they did not leave a secure area of ​​the airport. A video of the incident went viral on social media after it happened Posted by passenger to TikTok. Other videos circulating on social media also captured parts of the incident.

In the video, which has been viewed more than 910,000 times since it was posted two days ago, the officer warns passengers that they must leave the area or they will be “arrested for trespassing.”

“Now,” he continued. “Everyone to the unsafe side. The ticket counter will help you answer any questions you have.”

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Shelly Morrison, who was among the passengers with her three daughters, was queuing at the southwest gate hoping to get more information about what was going on with her flight, to me the Tennessee.

After she and others waited nearly an hour for an explanation, one of the workers announced via the intercom that she was leaving – and called security. Morrison told the local newspaper that he did not tell a passenger that they had to leave if they had a canceled ticket.

“The Southwest is calling us”

Soon, two police officers from the airport’s Department of Public Safety arrived at the scene, just as Morrison’s daughter, Amani Robinson, began recording a video.

An officer tells passengers in the video, “If you don’t have a ticket, you don’t have to be on the safe side.” To someone who said they had tickets, he replied, “Your tickets just got cancelled.”

Morrison asked the officer again if he might be stopped, and he repeated to him: “If you don’t have a valid ticket and you’re on the safe side and you refuse to leave, you’ll be arrested… If your ticket’s canceled, they don’t have a ticket anymore. You understand that, right?”

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He added, “Right now, Southwest is calling us because you guys are congregating here, and they’re trying to close that gate.”

The officer grew impatient when Morrison again tried to “establish a legal connection,” as she puts it in the video, and told him she was an attorney.

“Do you refuse to leave the safe side?” he asked clearly.

She replied, “No, I don’t refuse to leave.” “I ask for additional information. Can you mention the statue to me?”

He replied, “It is the security of airports and planes.”

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“Don’t you have a department?” she asked.

“I don’t need to give you the code. If you’re a lawyer, you can look it up.”

Morrison thanked him and went with the others to where he had indicated.

Southwest responds

when called luckA Southwest spokesperson said that employees “did not request that customers be escorted outside the gate area.” Instead, the company required “that local law enforcement be present at the gate to assist with crowd control efforts while our team works with customers.”

A spokesperson for Nashville International Airport, also known by the airport code BNA, responded:

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“The sheer number of flight cancellations over the past week has caused great stress for our passengers, and included an unfortunate incident involving a passenger, airline staff and an LNA officer. We are very sorry this happened and we take this situation very seriously. We are working with Southwest Airlines and our other airlines to promote better communication between team members so that every traveler enjoys the optimal experience at BNA:

luck She also contacted the Ministry of Transport regarding the airport incident, but did not receive any immediate response.

Southwest passengers trying alternative routes faced higher fares from other airlines, some of which — faced public backlash —Announce a price cap on the affected roads.

The Department of Transportation said this week it would open an investigation into Southwest Airlines. He. She he wrote in a tweet It was “concerned by Southwest’s unacceptable rate of cancellations, delays, and reports of a lack of prompt customer service. The department will study whether cancellations are manageable and whether Southwest is complying with its customer service plan.”

This article has been updated with responses from Southwest Airlines and the airport.

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Why Trump didn’t want you to see his tax returns

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What was he hiding?

We’re finally starting to find out, now that the House Ways and Means Committee has released six years of Donald Trump’s personal and business tax returns. Trump’s returns are complex and it could take weeks for experts to realize whether Trump cheated or used overly aggressive tactics to lower his tax bill. The committee did not release any tax documents for some of Trump’s business entities, so puzzles may remain.

But a few things soon emerge from the assessment of the leading figures in Trump’s comeback. When Trump announced his candidacy for the presidency in 2015, he described himself as a builder and businessman who could go to Washington and fix what politicians had destroyed. Trump’s stated status was as a political outsider and business titan crucial elements in his appeal to voters.

But Trump’s tax returns suggest his businesses are always losing money, while raising questions about how he manages to fund a gilded lifestyle. In each of the six years from 2015 through 2020, DJT Holdings, one of Trump’s main business entities, lost millions of dollars. The smallest loss was $34 million in 2015. The largest loss was $64 million in 2016. Combined, these losses totaled $314 million from 2015 through 2020.

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This is not an entirely new revelation. Glimpses of Trump’s finances have long revealed that Trump is capitalizing heavily on losses incurred in one part of his business portfolio, to offset gains elsewhere and significantly reduce his tax bill. Documents leaked to the New York Times in 2016 showed that Trump declared a loss of $916 million in 1995. lowered his tax bills for nearly two decades. When Trump began earning millions from The Apprentice TV show in the 2000s, losses from faltering real estate ventures, such as his casinos in Atlantic City, helped keep his income tax payments down. These practices are generally legal, although some tax experts believe Trump could have expanded the legal boundaries.

Members of the US House of Representatives Ways and Means Committee move boxes of documents after a panel meeting to discuss former President Donald Trump’s tax returns on Capitol Hill in Washington, US, December 20, 2022. REUTERS/Jonathan Ernst

When Trump ran for president in 2016, he said he would release his tax returns once the IRS finished auditing them. Of course Trump never released any tax returns, and the IRS audit wouldn’t have stopped him from doing so in the first place. Ways and Means Committee Finally got Trump’s payout from the IRS on Dec. 20, after Trump lost a four-year legal battle to keep them secret. He found justices all the way up to the Supreme Court Congress had the right to see the proceedsbecause it can contribute to legislative activity.

[Follow Rick Newman on Twitter, sign up for his newsletter or sound off.]

If Trump had released his comeback in 2015 while running for president in 2016, journalists and political opponents would have been mired in what appears to be huge business and personal losses. His return to DJT Holdings shows total revenue of $25.1 million but a net loss of $34.1 million. It is reasonable for a company to incur losses greater than revenue, since tax code allows for carry-over losses from prior years. But it’s very bad looks to tell voters you’re a business owner while reporting large losses to the IRS.

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Trump and his wife Melania’s 2015 comeback undermines his commercial credibility. Trump’s adjusted gross income in 2015 was $31.8 million. In other words, he supposedly lost $31.8 million, because he was allowed to claim losses from his business against his personal income. His taxable income was $0 and he owed $0 in federal income tax. It is difficult for average workers who earn most of their income from work to declare passive income, unless they have capital losses or other types of losses beyond what they earn from their employer.

Hillary Clinton, Trump’s Democratic opponent, She released her tax return for 2015 on August 12, 2016. The report showed that she and her husband, Bill Clinton, had an adjusted gross income of $10.6 million, and paid $3.6 million in federal income tax, for an effective tax rate of 34%. While the return showed the Clintons wealthy, they claimed no mysterious tax breaks except for a small capital loss of $3,000. Trump was the nominee going after meat-and-potatoes voters in 2016, but Clinton’s taxes were more involved.

DJT Holdings reported business losses for each of the next five years, through 2020. In terms of Trump’s personal returns, his adjusted gross income has been negative for three years and positive for two years. Over the six years combined, those business losses have pushed Trump’s total adjusted income – $53.2 million, or a loss of $53.2 million. His taxable income was $0 for four out of six years.

Trump has hit one snag with regard to federal income tax payments — the alternative minimum tax, which raises the tax liability of some, mostly wealthy, depositors who use the deductions to significantly lower their taxable income. During four of those six years, the federal tax code started to push Trump’s federal tax bill. Including regular income tax and AMT payments, Trump appears to have paid about $4.1 million in federal income taxes from 2015 through 2020.

If voters had been able to see several years of Trump’s tax returns during the 2020 presidential election, it would have been clear that Trump’s corporations lose money every year and that Trump as an individual loses more money than he earns, overall. This isn’t really how it works. Trump has very few regular sources of income, such as millions of dollars in interest each year, and the capital gains that would come from the countless deals to license the Trump name. This income appears to be constant and recurring, while losses may occur in a particular year or two, but are spread across many years, for tax purposes.

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Trump has sometimes bragged about the low taxes he’s paid, saying he’s drastically undercutting his tax bill It makes him smart. Maybe so. It will be interesting to see if that makes him more or less electable.

Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @tweet

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