NEWS,05.08.2012

Monti fears Europe could tear apart

Italian Prime Minister Mario Monti has voiced fears that tensions sparked by the eurozone crisis have already turned countries against each other and must not be allowed to rip Europe apart.Asked about resentment in Italy towards Germany and complaints of German arrogance in its handling of the debt crisis, Monti told Monday's edition of the German news magazine Der Spiegel that he was "concerned".He said he had talked about growing resentment in Italy not only towards Germany and at times Chancellor Angela Merkel but also towards the EU and the euro, with Merkel herself, according to an advance copy of Der Spiegel.But he said the problem went far beyond the relationship between Germany and Italy."The pressures, which have accompanied the eurozone in recent years, already bear the traits of a psychological breakup of Europe," Monti said. "We must work hard to contain it."And he warned that if the euro became a reason for Europe to drift apart, "the foundations of the European project" would be destroyed.The Italian prime minister also said he welcomed comments by the European Central Bank last week that the government bond market, where Italy and Spain's borrowing costs have soared, was distorted.The problems behind this, he said, must be quickly resolved to prevent further uncertainty about the ability of the eurozone to deal with the crisis.He also called on government chiefs to maintain clear room for manoeuvre in relation to their national parliaments. "If governments were to let themselves be bound completely by the decisions of their parliaments without maintaining their own scope for negotiation, Europe is more likely to break up than see closer integration," he warned.

Cayman Expat Tax: Haven's Planned Fee Could Damage Country's Economy

 

One among thousands of lawyers, accountants and other workers from around the globe, Paul Fordham is escaping cold weather and the taxman by working in a sunny British territory in the Caribbean. He and many others, however, worry they soon may be looking for another haven.The Cayman Islands have lost some of their allure by proposing what amounts to the territory's first ever income tax. And it would fall only on expatriate workers like Fordham who have helped build the territory into one of the most famous or, for some, notorious offshore banking centers that offer tax advantages for foreign investment operations."The discriminatory nature of the tax has stirred up so much uncertainty for people who moved here thinking they knew what they were getting into," said Fordham, an insurance sector specialist from the London area who moved to the main island of Grand Cayman 6 1/2 years ago. His recent attempt to sell his house collapsed because an interested buyer was spooked by the prospect of the islands' first direct tax.In the seaside capital of George Town, where financial experts in casually elegant clothes unwind over beer or white wine, conversations have been about little else since July 25, when Premier McKeeva Bush declared his intention to impose a 10 percent income tax on expatriate workers as part of an effort to bail the government out of a financial hole.Bush refuses to call it a tax, preferring instead to dub it a "community enhancement fee." The 10 percent payroll levy, as things stands now, will be imposed Sept. 1 on expatriates who earn more than $36,000 a year.It's a monumental shift for the territory of 56,000 people where zero direct taxation, friendly regulations and the global money they lured in recent decades helped transform the economy of the island chain, a dependency of Jamaica until 1959, from a reliance on seafaring, fishing and rope-making.Government data show 91,712 companies were registered as of March 2011. A total of 235 banks, including most of the world's top 50 banks, held licenses at the end of June as did 758 insurance companies. Assets for the registered companies totaled $1.607 trillion last September, down from $1.725 trillion a year earlier.Bush says the tax is necessary to meet British government demands that the territory diversify its sources of revenue beyond the fees and duties it now relies on, that have left his administration with a budget deficit."This is not an us-and-them story, no matter how many screaming headlines call this an expat tax," Bush told a crowd of critics and supporters late Wednesday during a four-hour meeting in a school gym, where each side vented complaints against the other.Opponents argue that a social contract may have been broken by targeting only the roughly 5,875 expatriates who are paid more than $36,000 a year, saying it could drive some away and hurt the financial services and tourism sectors that are now the pillars of the Caymans' economy. Government reports say a majority of the wealthiest residents are Cayman citizens.Numerous competing tax havens, from Jersey to the British Virgin Islands, impose income taxes on workers, but not on one sector of the population. Under a controversial "rollover" immigration policy, expatriates in the Cayman Islands already are required to leave the islands for a year after living and working locally for a period of seven years.Richard Murphy, director of British-based policy consultants Tax Research LLP, thinks fears are overblown that a direct tax on expatriates will cause an exodus."The finance industry in Cayman exists to sell to foreigners, and, like it or not, many are heavily invested in Cayman structures. They'll bear the additional price," Murphy said in an email.But leading businessmen argue that indirect taxes such as work permit fees, stamp duty on real estate deals and duties on imported goods already make the Caymans a relatively pricey place to do business. Work permit fees are typically 5 percent to 15 percent of salary and would remain along with the income tax, raising an expat worker's tax costs to between 20 percent and 30 percent of salary.Anthony Travers, chairman of the Cayman Islands Stock Exchange, described the tax plan as "probably the single greatest existential threat to the Cayman Islands in over 200 years.""The whole economic structure in the Cayman Islands has been based on having no direct taxation," he said in a phone interview.Many people complain that Bush's proposal was made without public consultation and note that it came roughly three years after a government-commissioned report said a payroll tax combined with the work permit fees would make the Caymans less competitive in the market for skilled professionals.And it's not just finance types who are troubled. At a small beach in downtown George Town, local fishermen gutted glistening jacks and snappers debated the merits of the new tax. They agreed that overspending and excessive hiring by the government was behind the islands' financial difficulties."The way I see it, this tax on expats is causing a division in this society and that's not good. It's too much spending by the government that got us here," said fishing boat captain Dennis Downs, sitting next to a table displaying the morning catch.Bush said he is looking for any feasible alternative for solving the government's revenue problems and rumors are swirling that he may withdraw the tax proposal because of the heated reaction.On Saturday, he told local TV station Cayman 27 that he was open to recasting the "community enhancement fee" on expats but only "if a solution can be found that does not affect ordinary Caymanians."Even if it is revoked, some believe damage has already been done."It has stirred up so much uncertainty," said Fordham. "It's hard to say if this place could ever be the same."

Venezuela Presidential Elections: Thumbprint Readers Stir Vote Fairness Fears

 

With President Hugo Chavez in his tightest re-election race yet, some of his opponents are warning that the use of thumbprint readers at Venezuelan ballot boxes could scare away voters, adding to fears about the fairness of the Oct. 7 vote.The country's electoral council has long used fingerprint scanners at the entrance to polling places to ensure voter identification. But this year, the readers will be hooked to the electronic voting machines themselves. Citizens must press down a thumb to activate the ballot system.Many say they fear that could let the government know how each person votes."If the thumbprint makes the machine work, how do you know it doesn't end up being recorded who you voted for?" asked Jacqueline Rivas, a 46-year-old housewife.Experts say there is no evidence the system has ever been used to reveal voters' preferences, and most opposition leaders, who stand to suffer if supporters don't vote, have been eager to assure the system is safe.But worries have persisted. Many Venezuelans say they see a pro-Chavez bias in the National Electoral Council and remember a previous scandal in which the names of Venezuelans who petitioned to recall Chavez in 2004 were publicly leaked. Hundreds of people alleged they were fired or suffered discrimination after their names turned up on the so-called "Tascon List," named after a pro-Chavez lawmaker who released it.Chavez later urged supporters to "bury the list" and put it behind them.Worries about the government obtaining the names of anti-Chavez voters led the opposition to destroy many lists of voters after a February primary, flouting a Supreme Court ruling that the lists should be turned over to the electoral council."A government that has fired people for thinking different, for voting different, that drew up the Tascon List and that puts out thumbprint machines, that puts in people's minds ... makes them fear the thumbprint," said Ramon Muchacho, an opposition politician.Opposition presidential candidate Henrique Capriles and his campaign aides have sought to assuage fears, saying that they are sure voters' choices will remain secret and that no one should cave to any government attempts at intimidation.Others who question the thumbprint readers include the vote watchdog group Sumate. Ricardo Estevez, the group's executive director, said past checks of the system have shown that safeguards are in place to ensure secrecy. "But the problem is the perception," Estevez said.When a voter presses a thumb to the reader, the image is instantly checked against a government database of thumbprints, which are collected when citizens apply for national identification cards.The National Electoral Council has been touting the system in television ads that show a smiling man pressing a thumb onto the screen as a voice assures voters that the automated identification system is a "secure key to vote."Sumate and other critics question how effective the system is, pointing to the statements by election officials that the thumbprint data are incomplete and saying the voter rolls haven't been audited to weed out errors and duplicate registrations.Diego Arria, a Chavez opponent who is a former Venezuelan ambassador to the United Nations, said the thumbprint system won't ensure that each voter casts only one ballot. "But it will work for something, and it's the fundamental aim: to intimidate voters."In addition to public employees who may fear for their jobs, there are also more than 1 million Venezuelans who have given their thumbprints when they applied for public housing, Arria said. "It serves to scare them."Even critics who say they're confident the vote will remain secret worry about the fairness of the election campaign, saying the electoral council tilts in Chavez's favor.Four of the five members of the council are either Chavez allies or perceived as favoring the president. The National Assembly, where Chavez backers have long held a majority, appoints the council members, who include a former congresswoman from Chavez's party and a former minister in his Cabinet. The council's former chief, Jorge Rodriguez, is now Chavez's campaign manager.The council has largely ignored opposition complaints that Chavez is hogging campaign airtime and abusing his presidential authority by regularly forcing all Venezuelan TV and radio stations to interrupt programming for his marathon speeches.Last week, council Vice President Sandra Oblitas accused Capriles of "contempt of the electoral authority" for ignoring council warnings about using a baseball cap with the colors of the national flag. Campaign regulations ban use of the flag's colors in electoral propaganda, but Capriles maintains he has done nothing wrong."In Venezuela, there's no electoral referee. There's a ministry of elections of the regime," Arria said. "When such a sophisticated system is put in their hands, it makes it more dangerous. "Tibisay Lucena, the president of the electoral council since 2006, insists the body is fully independent and defends the country's automated voting system, which also involves manual auditing of paper receipts printed out by the ballot machines."The Venezuelan electoral process is one of the most audited in the world," Lucena told reporters recently. "We have controls that make impossible any attempt to interfere with the public will."Capriles has been trailing in the polls, though the margin has varied widely in surveys. The Venezuelan polling firm Datanalisis found Chavez with a 15-point lead in one June poll, but also said 23 percent were undecided or didn't reveal a preference. The poll had a margin of error of nearly 3 percentage points."Beyond the automated system and other factors, we have no doubt that if we have low abstention and the presence of witnesses in all the voting centers, we're going to win," said Teresa Albanes, who leads the opposition's election commission.