Posts Tagged tax
Ghana 2011 budget uses tax hikes to fund spending
Posted by Oksana Grebenjuk in Trading Markets on Ноябрь 30th, 2010
Ghana predicted economic growth would double to 12.3 percent in 2011 as its first oil arrived and announced a series of tax hikes aimed at financing heavy new infrastructure spending.
Unveiling next year’s budget to parliament, Finance Minister Kwabena Duffuor pledged to narrow the fiscal deficit from 9.7 percent this year to 7.5 percent in 2011, and foresaw inflation falling steadily through to 2012, when Ghana goes to the polls.
Urging Ghana to avoid the fate of other nations that saw oil finds undermine other sectors in their economies, Duffuor warned that hydrocarbon revenues would not be enough in themselves to transform a country still marked by widespread poverty.
«We must continue to focus our attention on the non-oil sector of the economy, particularly agriculture, small, medium and micro enterprises, mining and manufacturing sectors, which, hitherto, have been the backbone of the economy,» he said of cocoa’s traditional cocoa, gold and other industries.
Duffuor forecast 2011 growth at 12.3 percent compared to 5.9 percent this year. Annual inflation, which has fallen sharply over the year to stand at 9.38 percent in October, would fall to 8.5 percent by December 2011 and 7.0 percent in 2012, he said.
«The new budget is sensible and realistic,» said Lisa Lewin at London-based Business Monitor International. Read the rest of this entry »
Interest rates may rise, but won’t be anything dramatic
Posted by Oksana Grebenjuk in Banks on Октябрь 13th, 2010
The U.S. economy is headed for a sustainable recovery, albeit not as robust and previously expected, while the risk of entering into a double-dip scenario remains very small. Moreover, it’s only a matter of time before interest rates start rising again.
Robert J. Ostrowski, chief investment officer for the taxable fixed income group at Federated Investors, said any rate hikes will not be dramatic.
“It is unlikely growth will be strong to ignite inflationary pressures that heretofore have been drenched to the core,” he said. “Thus we believe rates will remain range-bound for the next three months.”
Although the recession ended about a year ago, many Americans remain waiting for a real recovery.
Indeed, outside of manufacturing, Ostrowski noted, corporate earnings and cash-flushed corporate balance sheets, the economic data continues to be soft to mixed, with housing bouncing around a bottom, employment growth almost nonexistent and consumer spending so-so.
“A lot of damage was done by the longest and deepest recession of the post-World War II era, and fixing it is going to take time,” he cautioned. “It doesn’t help that the political environment has turned so toxic that there’s nothing close to a consensus on what to do. Business and the markets hate uncertainty and lack of clarity.” Read the rest of this entry »
A Hazard Of Buying Bond Funds Now
Posted by Oksana Grebenjuk in Favourites, Fund Markets on Сентябрь 30th, 2010
A number of us here at Weiss have been warning you about the dangers of buying bonds in this ultra-low-interest-rate environment, especially longer-dated U.S. Treasuries.
But as I recently told my Dad’s Income Portfolio subscribers, I think mainstream investors are still ignoring the risks they’re taking with bonds, particularly when it comes to fixed-income mutual funds and exchange-traded funds.
And this topic is so important that I want to explore it a little more today with you. After all …
Investors Have Been Snapping Up
Bond Funds at a Record Pace Lately
According to the Investment Company Institute, investors were net sellers of stock market mutual funds in the first seven months of this year, withdrawing more than $30 billion.
At the same time, they plowed a net $273 billion just into taxable bond funds! Read the rest of this entry »
Could Your Offshore Jurisdiction Go Bankrupt? Part I
Posted by Oksana Grebenjuk in Investing on Июль 20th, 2010
Offshore centers now face a perfect financial storm. In more prosperous times, revenues from the offshore sector, along with tourism, helped fuel these countries’ economies. Their governments emulated more developed nations by borrowing heavily to build up their infrastructure. They also bought votes with social programs and bloated government payrolls.
When the global economy tanked, tourist revenues fell, along with revenues from their offshore sectors. But the social programs and bloated payrolls remained.
Blame Offshore Tax Havens! (Again)
The economic crisis also led to worldwide drop in tax revenues, with the biggest losers big industrialized countries like the United States. Politicians in these countries found a convenient scapegoat to blame for falling tax revenues: dozens of mostly tiny offshore centers.
Using the economic crisis, the world’s richest and most powerful governments had the perfect opportunity to achieve a long-term goal: forcing offshore jurisdictions to enforce their tax laws. They acted through non-governmental organizations they control, such as the Organization for Economic Cooperation and Development (OECD). The OECD has the authority to issue supposedly non-binding «best practices» guidelines. And, the OECD now decrees that «best practices» meant becoming tax collectors on behalf of these rich and powerful governments. Read the rest of this entry »
Nineteen Billion Dollars Is A Big Deal
Posted by Oksana Grebenjuk in Banks on Июль 2nd, 2010
The blogosphere is having conniptions over Scott Brown’s announcement that he won’t vote for final passage of FinReg because of the $19 billion tax on banks that was incorporated at the last minute. The recurring theme is that $19 billion is a small amount of money and that anyway it’s going to be levied on the big banks that have benefited from government efforts to keep the financial system afloat.
Here’s what Ryan Avent has to say:
The fee in question was introduced during the conference session and is designed to cover the cost of the bill, that is, to make sure it’s deficit neutral. It’s a modest amount, and it’s levied on entities that have benefitted significantly from the massive government intervention deployed to keep the financial system afloat during the financial crisis.
And Joe Weisenthal jumps on the subject with this:
This whole thing is a bit silly. $19 billion, levies across the financial system, on various players based on their size is tiny. We repeat: tiny. And beyond that, this isn’t some kind of punitive tax; it’s designed to pay for the enforcement of the bill, which presumably Scott Brown is in favor of, if he likes the rest of the bill. Read the rest of this entry »
Does The Tax Code Penalize Savings?
Posted by Oksana Grebenjuk in Budget on Июнь 4th, 2010
Larry McDonald has a mini crusade on adopting a flat tax. The proposal most likely encounters more political issues than purely economic ones. But a flat tax is one way of looking to solve the large economic issue. Mainly, we are a society wedded to the urgency of consuming now and have become terrible savers as a result. While politicians may be setting up financial literacy task forces and regulating the financial industry, it may best spend more time looking at how the tax code promotes us the wrong type of behavior (unless, conspiracy minded people think this is exactly the type of society leaders want…).
For example, the American estate tax is a punitive tax (the Federal tax is 55% in 2011 with an exclusion amount of $1 million assuming Congress does not pass other legislation) which implicitly encourages people to spend it in life rather than pass it onto generations. The larger, more global problem, is that interest income on savings is taxed higher than any other form of investment income.
The reason for this policy used to make sense. When North American society actually saved and the economy was in a long boom period, the tax code was attempting to discourage the taxpayer from stashing money in high-interest savings accounts and, instead, encourage investment in industry by investing in equities. This policy works if you assume: (i) the population is saving; and (ii) the demographics were aligned in such a way that a taxpayer could enter into the risk-reward of investing in equities. Read the rest of this entry »
Mortgage Data Leaves Bankers Uncertain of Trend
Posted by Oksana Grebenjuk in Banks on Май 24th, 2010
Any way you look at it, extraordinary numbers of people are having trouble paying their mortgage. What is less clear is the extent to which the problem is getting worse, better or is simply holding its own.
Data released Wednesday by the Mortgage Bankers Association showed the mortgage delinquency rate rose in the first quarter to 9.38 percent of all loans outstanding, from 8.22 percent in same period last year.
When adjusted for seasonal variations, the default rate rose over 10 percent for the first time.
Seasonal adjustments are used to smooth out data in ordinary times, but in these extraordinary times the bankers’ group said it was not sure how much they could be trusted. In the first quarter the seasonal adjustments showed the delinquency rate worsened considerably. The raw data, on the other hand, indicated a marked improvement.
Warning that “fundamental market factors” might be exercising undue influence over the seasonal numbers, the mortgage bankers said they did not know whether the optimistic or pessimistic sequence was more accurate.
“We may be at a point where the market is changing for the better, but we can’t be sure because of the confounding effect of seasonal differences,” said Jay Brinkmann, the group’s chief economist. Read the rest of this entry »
Whistle-Blowers Become Investment Option for Hedge Funds
Posted by Oksana Grebenjuk in Fund Markets on Май 21st, 2010
Hedge funds have found a new market to invest in: whistle-blowers.
Informants who turn in tax cheats have to wait years to get their share of any reward from the I.R.S.’s recently expanded whistle-blower program. So hedge funds, private equity groups and other big investors are offering an alternative. They are essentially agreeing to buy a percentage of those future payouts in exchange for a smaller amount upfront to the whistle-blowers.
The surging size of the potential awards is driving all the interest. Three years ago, the I.R.S. began offering bigger rewards — 15 percent to 30 percent of whatever money the government recovered — in a move that has turbocharged the agency’s whistle-blower program.
Where it once handled only a trickle of tips, often involving relatively small amounts of unpaid taxes, I.R.S. offices now receive a torrent of big money claims. Accountants and company employees have taken to trooping in bearing computer records and boxes of documents to back up their claims of underpayment by big companies.
In what is believed to be the first of these structured tax payouts, an I.R.S. informant who reported that an overseas multinational corporation had underpaid its taxes by billions of dollars received $4 million last month from a private equity firm. In exchange, the firm will receive a portion of the award the informant expects to collect eventually. Read the rest of this entry »
Hedge funds, private equity expect tax hike
Posted by Oksana Grebenjuk in Budget on Май 19th, 2010
Private equity, real estate and hedge fund managers are increasingly resigned to a tax increase on their profits as U.S. lawmakers get set to vote next week on a long-delayed measure.
At issue is a change in the tax treatment of profits earned by partnership fund managers, known as «carried interest.» The measure would treat the profits as ordinary income subject to a 35 percent rate, more the double the 15 percent rate they are currently taxed at as capital gains.
The tax change, which lobbyists have managed to beat back for three years, has gained steam as lawmakers hunt for revenue to fund other popular tax breaks for business that have expired. Many lobbyists and former opponents now see passage of an increase as inevitable.
«Many people are resigned because it is round four,» said Francois Hechinger, a partner at BDO Seidman advising private equity and venture capital clients..
He added that they are still putting up a fight to try to soften the impact. «If it was really their choice they wouldn’t give up on it at all.»
The $20 billion or so of revenue that the tax change could raise over a decade would help pay for a politically popular group of tax breaks for individuals and business, including a corporate research and development tax credit. Read the rest of this entry »
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