NEWS,04.02.2013

Media lampoons Berlusconi's tax promise

Silvio Berlusconi's rivals lampooned him as a snake charmer and a TV huckster selling pots and pans on Monday after he promised sweeping tax cuts if his centre right wins Italy's election this month.The former prime minister launched his "last great electoral and political battle" on Sunday with a plan to reduce government spending, enact fiscal reform and what he called a "shock proposal" - reimbursing Italians for a much-hated tax on primary residences imposed last year.Forced from power in 2011 after financial market turmoil that threatened to push Italy into a Greek-style debt crisis, Berlusconi has focused his comeback hopes on attacking the austerity policies of Mario Monti's technocrat government."Even an imbecile is able to invent new taxes and impose them on citizens but only an intelligent person can cut costs," Berlusconi said at a rally in Milan, the northern city where he made his media and real estate fortune. But the day after, it was Berlusconi who was mercilessly derided by most newspapers and political opponents. Corriere della Sera, Italy's leading paper, ran a cartoon depicting him dressed as a smiling joker in a carnival outfit throwing coins and banknotes to everyone in his wake.Monti called Berlusconi "a snake charmer" and accused him of trying to sell "a dream even more fantastic than that in Alice in Wonderland".Just about the only comfort Berlusconi found in the media was in a headline in Il Giornale, a newspaper owned by his family: "Finally, More Money".The real estate tax, known as IMU, was imposed on primary residences last year by Monti to help with Italy's financial crisis, after it had been abolished in 2008 by Berlusconi.It is estimated to have raised some €4bn last year, a sum Berlusconi dismissed as no more than 0.5% of the €800bn annual budget.He said he would scrap the tax at his first cabinet meeting and refund payments already made. He promised to phase out a regional tax on businesses, reduce personal income tax rates, not hike value added tax (VAT) or impose a "wealth tax" on higher earners."This can work if alternative revenues are found," said Professor Fabio Marchetti, a tax expert at Rome Luiss university. "But I think it is rather utopian and demagoguery because it would make us the only country with no tax on primary residences." Berlusconi was criticised even by former allies.Giulio Tremonti, economy minister in the last Berlusconi government, said reimbursing the real estate tax "would objectively create a problem for public accounts."Vittorio Feltri, a journalist who was for years the editor of Il Giornale, said: "If the state can't find the money to pay its suppliers or make tax refunds, where is it going to find the money to reimburse the real estate tax?"Berlusconi said the money would come in part from striking a deal with Switzerland to tax financial activities there by Italian citizens."But a possible accord with Switzerland is still in stormy waters," said Professor Marchetti, adding that it could never be worked out before the new government takes office in April.Berlusconi promised to save money by cutting government waste, halving the number of parliamentarians, and eliminating public financing of political parties. Income would come from new taxes on things he called "not of primary necessity" - tobacco, gambling and lottery tickets."Some people will buy into it and it certainly will have an effect on some people's voting intentions but the unknown is how much of an effect it can have," said Marchetti.Most opinion polls indicate that the centre-left coalition, headed by Democratic Party secretary Pier Luigi Bersani, will win the Feb. 24-25 election. But the gap between the centre left and the centre right has narrowed steadily since Berlusconi returned to active politics. ($1 = 0.7301 euros)

German car sales down

New car registrations in Germany, a key measure of demand in one of the most crucial sectors of Europe's top economy, fell sharply in January, official data showed on Monday.Some 192 100 new cars were registered in January, a slump of 9% compared with the same month a year earlier, the VDA auto industry calculated.Export sales of German-made cars were down as well, falling by 8% to 310 700 units in January.In terms of output, the number of cars rolling off the production line fell by 11% to 394 300, VDA added.

 

Obama: more tax revenue needed

President Barack Obama said on Sunday more tax revenue would be needed in the coming years to reduce the US deficit but raising tax rates was not a key issue."I don't think the issue right now is raising rates," Obama said in an interview on CBS."There is no doubt we need additional revenue, coupled with smart spending reductions in order to bring down our deficit. And we can do it in a gradual way so that it doesn't have a huge impact," he said.At the beginning of the year Obama pushed through legislation to address the US fiscal cliff that raised income tax rates on households making more than $450 000 a year.

UK banks face break-up under new law

Britain's biggest banks will face being broken up if they fail to ring-fence their retail and investment arms, under draft legislation set to be announced by finance minister George Osborne on Monday.The new law will empower the government and a new banking watchdog to "electrify the ring-fence" if banks refuse to separate high-risk operations from savers' deposits.Launching the Banking Reform Bill, Chancellor of the Exchequer Osborne was due to say that banks will no longer be able to become "too big to fail", forcing the taxpayer to bail them out.The government had already announced plans to force banks to ring-fence operations by 2019, in a bid to avoid taxpayers having to bail out troubled banks as was the case during the financial crisis.But the draft law has been toughened up to include "electrification" of the ring-fence after the Parliamentary Commission on Banking Standards complained last month that the proposals fell "well short of what is required".Osborne had previously warned the commission against "unpicking the consensus" on structural reform of the banking sector but appears to have accepted its warning that the draft law left room for loopholes.The announcement puts the finance minister on a collision course with Britain's banks, which claim the legislation would make London less attractive as a global financial centre."This will create uncertainty for investors, making it more difficult for banks to raise capital, which will ultimately mean that banks will have less money to lend to businesses," said Anthony Browne, chief executive of the British Bankers' Association."Above all, what banks and business need is regulatory certainty so that banks can get on with what they want to do, which is help the economy grow."But Osborne was set to tell bankers: "When the RBS (Royal Bank of Scotland) failed, my predecessor Alastair Darling felt he had no option but to bail the entire thing out."Not just RBS on the high street, but the trading positions in Asia, the mortgage books in sub-prime America, the property punts in Dubai."I want to make sure that the next time a Chancellor faces that decision they have a choice. To keep the bank branches going, the cash machines operating, while letting the investment arm fail."If passed, the Banking Reform Bill would also establish a new watchdog for the industry and force investment and retail banks to have separate bosses.

No sign US eavesdropped on Cole suspect

A judge at Guantanamo Bay refused on Monday to suspend a pre-trial hearing for the prisoner accused of orchestrating the attack on the USS Cole, ruling that defence lawyers had offered no evidence supporting their suspicion that the CIA can eavesdrop on their private conversations with their client.Army Colonel James Pohl said that unless the defence can offer evidence of eavesdropping, the hearing for Abd al-Rahim al-Nashiri would continue."I can't stop a trial simply because something might happen," Pohl told defence attorney Navy Lieutenant Commander Stephen Reyes during a heated exchange at the start of the scheduled four-day hearing.Pohl granted ali-Nashiri's lawyers a three-hour recess to consider whether they can ethically continue representing him if they suspect that their privileged conversations are being monitored.The hearing was held at the US naval base in Cuba. AP watched a video feed of the hearing at Fort Meade.Al-Nashiri, a Saudi national, is charged with orchestrating the 2000 attack on the USS Cole, which killed 17 sailors and wounded 37. He has been imprisoned at the Guantanamo since 2006, after being held by the CIA in a series of secret prisons. He is considered to be one of the most senior leaders in al-Qaeda.The eavesdropping issue sprang from an episode last week in another Guantanamo case in which an undisclosed government agency unilaterally silenced courtroom loudspeakers to prevent spectators from hearing classified information. Pohl, who was surprised by the action, ordered the agency on Thursday to disconnect the equipment.Reyes said the defence wants to know whether any third party can secretly monitor privileged conversations at the courtroom defence table, in a nearby holding cell or elsewhere on the base.Prosecutor Anthony W Mattivi assured the judge that no such capability exists. Reyes wasn't satisfied."Now that we know there's a man behind the curtain, we can't say, 'Ignore the man behind the curtain’," Reyes said.Reyes said he especially wants to know if the CIA can eavesdrop on those conversations."If it is the CIA that is conducting the listening, this is the same organisation that detained and tortured Mr al-Nashiri," Reyes said.A CIA inspector general's report said al-Nashiri was waterboarded and threatened with a gun and a power drill because interrogators believed he was withholding information about possible attacks against the US. Such practices were allowed under rules approved by the George W Bush administration but many them have since been repudiated as torture.