NEWS,17.01.2013

EU tax ruling a blow to health firms

Spain's decision to cut VAT on some medical products was ruled illegal by Europe's highest court on Thursday, a fresh blow to health companies already struggling to get local authorities to pay their bills, who will now have to raise product prices.The ruling means that cuts made two years ago to bring value-added tax to between 4 and 10% will have to be reversed to the standard level of 21%.Fenin, an association that represents health technology companies in Spain, warned a VAT hike would increase costs for local governments by at least €1bn and lead them to rack up even more debt with pharmaceutical companies. "This ruling is unfair for citizens and could create difficulties for patients to access products that play an important part in the prevention, diagnosis and treatment of illnesses," Fenin said in a statement. Spain's cash-strapped local authorities, which control health budgets, have racked up billions of euros in unpaid bills for medical goods, missing budget targets set by central government as it grapples with a national economic crisis.Central government settled €6bn of outstanding bills by the end of the 2011 but the regions still owed €2.3bn as of last September.Pharmaceutical companies in Spain have warned their future could be jeopardised if the government does not stop over-spending regions from racking up debts.Spain's Treasury said it would work with the European Commission to identify which products would be affected by the court ruling.Brokerage Banesto Bolsa said the EU ruling was "very bad news" for companies that provide medical products like syringes for hospitals, estimating that their earnings before interest, tax, depreciation and amortisation could fall 15%. Lobby group Farmaindustria, which represents pharmaceutical companies, said the decision would have little effect on laboratories that produce new medicines, given that tax on raw materials used in the process was a very small part of total expenditure."Of course there will be impact but it won't be major," said Julian Zabala, spokesperson for the group.Spain found itself in the dock after the European Commission said it had breached EU rules."By applying reduced rates of VAT beyond what is authorised under the VAT Directive, Spain has failed to fulfil its obligations under EU law," the Luxembourg-based EU Court of Justice ruled.The court said Spain could not set lower taxes for medical substances, which are normally used in making medicines, or for medical products used to treat illnesses.

US gun measures face tough road ahead

President Barack Obama's sweeping gun-control package faces an uncertain future in Congress, where majority Republicans in the House of Representatives are rejecting his proposals, while the president's allies in the Democratic-controlled Senate are stopping well short of pledging immediate action. Obama's plan marks the most comprehensive effort to tighten gun laws in nearly two decades as he tries to build on the high emotions over last month's school shooting in Connecticut, where a gunman with a legally purchased high-powered rifle killed 20 children and six adults. Obama has called that day the worst of his presidency.The president's announcement on Wednesday appealed to both common sense and conscience, but frustrated observers of Congress say the growing partisan divide is little swayed by either."To make a real and lasting difference, Congress must act," Obama said. "And Congress must act soon."Obama must try to push through an assault weapons ban and other sensitive measures through a Congress that is already busy preparing for fights over three looming fiscal deadlines and a debate over comprehensive immigration reform.The country's most powerful pro-gun lobby, the National Rifle Association (NRA), is already rejecting many of Obama's proposals as it insists on an absolute reading of the Constitution's Second Amendment-guaranteed right to possess and bear firearms. The group, which also represents a gun industry that since the Civil War has promoted a national gun culture, has long warned gun owners that Obama wants to take their guns away.Critics counter that the country's founding fathers never could have foreseen assault weapons more than two centuries ago, when guns were intended for the common, not individual, defence, guns were often stored in community areas and rifles fired one shot at a time.The head of the NRA on Thursday morning said the organisation has no problem with tighter background checks of gun purchasers, another key Obama proposal. But David Keene told CBS that too much emphasis has been placed on banning certain firearms and said officials should focus instead on the "devastatingly broken mental health system in this country”.The fate of Obama's gun plan could ultimately hinge on a handful of moderate Democratic senators. Although they are unlikely to endorse the president's call for banning assault weapons, they might go along with other proposals, such as requiring universal background checks on gun purchases and limiting ammunition magazines to 10 rounds or less.Several of these senators responded warily after Obama unveiled his proposals."I will look closely at all proposals on the table, but we must use common sense and respect our Constitution," said Senator Jon Tester. The Democrat told the Missoulian newspaper in his home state recently that he supports background checks but doesn't think an assault weapons ban would have stopped the Connecticut shootings.Seeking to circumvent at least some opposition in Congress, Obama signed 23 executive actions on  Wednesday that don't require lawmakers' approval, including orders to make more federal data available for background checks and end a freeze on government research on gun violence. But he acknowledged that the steps he took on his own would have less impact than the broad measures requiring approval from Congress."I will put everything I've got into this, and so will Joe," the president said, referring to his vice president. "But I tell you, the only way we can change is if the American people demand it."Republican leaders in the House of Representatives have made clear they'll wait for the Senate to act first, since they see no need to move on the contentious topic if it doesn't."House committees of jurisdiction will review these recommendations. And if the Senate passes a bill, we will also take a look at that," said Michael Steel, spokesperson for House Speaker John Boehner.Many rank-and-file Republicans criticised Obama's proposal. "The right to bear arms is a right, despite President Obama's disdain for the Second Amendment," said Republican Tim Huelskamp.Senators are expected to begin discussions on how to proceed when they return to Washington next week from a congressional recess, according to a Democratic leadership aide who requested anonymity to discuss internal deliberations. They could end up breaking the president's proposals into individual pieces, with votes possibly starting next month.While the assault weapons ban is seen as having little if any chance of passage, support may coalesce behind requiring universal background checks, which is a top priority for advocacy groups that see it as the most important step to curbing gun crimes. The Brady Campaign to Prevent Gun Violence says 40% of gun sales are conducted with no criminal background checks, such as in some instances at gun shows or by private sellers over the Internet. Obama would seek to require checks for all sales.Senator Chuck Schumer, a Democrat, already has sponsored a bill to require universal background checks that the Senate could take up, while Senator Frank Lautenberg, another Democrat, has legislation banning ammunition magazines with more than 10 rounds.Senate Majority Leader Harry Reid, a Democrat and gun-rights backer who's been supported by the NRA in the past, responded cautiously, saying he was committed to ensuring the Senate considers legislation on gun violence early this year. He didn't endorse any of Obama's proposals.Despite the uncertainty in Congress and opposition from the powerful NRA, outside groups are encouraged by polling showing public support for change.A lopsided 84% of Americans back broader background checks, according to a new AP -GfK poll. Nearly six in 10 Americans want stricter gun laws, the same poll showed, with majorities favouring a nationwide ban on military-style weapons."Now it's up to us," said Dan Gross, president of the Brady Campaign. He said his group would be working "to bring that voice to bear in this process, because without that it's not going to happen”.

Israel's voting system breeds pluralism

Israel's voting system reflects the many different political currents in society, but it has also been behind the repeated failure of governments to form stable coalitions.The proportional representation system means that any party can enter the 120-member parliament, or Knesset, if it passes a threshold of 2% of the popular vote.The number of seats that party secures is proportional to the number of votes received.In Tuesday's election to choose the country's 19th Knesset, 5.6 million citizens are eligible to vote. There are 10 133 polling stations nationwide.Thirty-eight parties on 34 lists will battle for seats in the next Knesset, reflecting the country's eclectic political map. However, polls predict that fewer than half of them are expected to enter parliament.After the official results, President Shimon Peres has seven days in which to entrust forming the next government to the party leader who says he or she is ready to do so.The party leader then has 28 days to put together a coalition. If necessary Peres can extend the deadline by another 14 days.If a coalition fails to emerge, he can assign another party leader with the task, and this person also has 28 days to form a government.If this bid fails, Peres can then assign the task to a third person, but should this person not succeed within 14 days the president then calls a new election.Whoever gets first shot at forming a coalition of at least 61 MPs is generally the leader of the party that wins the most votes, although this is not mandatory.No single party in Israel has ever been able to secure the necessary 61 seats to enable it to rule alone.Twice - in 1996 and 1999 - Israelis voted directly for a prime minister as well as for a party list. In 2001, a special prime ministerial election was held after then Labour Premier Ehud Barak was unable to win the Knesset's support.Creating a coalition can be painstaking, as the leading party must accommodate different parties demanding portfolios in the new cabinet, each with its own agenda.This is the main source of instability in most Israeli governments, with only six of the past 18 parliaments able to complete their four-year mandate.The success of the political haggling that begins immediately after the election will determine how strong and viable Israel's next government becomes.