financial transactions

French Tax Proposal Tackles Data Harvest by Google and Facebook

February 24, 2013 by NewsMaker Leave a Comment

PARIS — When it comes to taxes, the French are pioneers. In 1954, they introduced the world’s first value-added tax. Since then, they have proposed or championed duties on all manner of other things, like online advertising, pollution, financial transactions and vacation homes.

Only a few weeks after the French Supreme Court rejected one new tax proposal — a 75 percent levy on incomes of more than €1 million, or $1.3 million, a year — an even more novel idea began percolating through the halls of the finance ministry last month: a proposal to tax the collection of personal data on the Internet.

Google and Facebook know that John Doe “likes” wine, is shopping for a Volkswagen and often e-mails Jane Doe. Soon, they might have to pay for gathering that information.

Does France really need another tax? As of 2009, French tax revenue was equivalent to 42 percent of gross domestic product, one of the highest burdens in the world, according to the Organization for Economic Cooperation and Development, the coalition of free-market democracies. The U.S. figure was 24 percent.

But Nicolas Colin, one of the authors of a report in which the idea of taxing data collection was floated in January, insists that the proposal serves an important purpose. Like other European countries, France has been frustrated by its inability to raise significant tax revenue from the billions of dollars worth of sales and profits that Internet companies, many of them American, generate in Europe every year. Meanwhile, despite so-called austerity measures, budget deficits remain large.

“Every government needs revenues,” Mr. Colin, a government auditor and technology entrepreneur, said in an interview. “If they can’t get them from the most profitable companies, then they have to get them from the rest of us — individual taxpayers and smaller, struggling companies.”

Internet companies like Amazon.com, Facebook and Google, along with a number of other multinationals, stay largely out of reach of tax collectors in large European countries like Britain, France and Germany by routing their sales through smaller countries, like Ireland and Luxembourg, where corporate tax rates are lower. The companies insist that such practices are permitted under E.U. law and international taxation treaties.

France and other countries have initiated talks aimed at changing those conventions, so Internet companies could be taxed in the country where a sale takes place, rather than in the location where the transaction is recorded. But that could take many years, with no guarantee of any change.

France, on the other hand, could impose a tax on data collection unilaterally and quickly, Mr. Colin said. Yet the prospects for his proposal are unclear. While the report was commissioned by the government, it is not an official policy document, and the finance ministry has yet to take a position on the idea.

On other issues involving the digital economy, the administration of President François Hollande has sent mixed signals. After threatening Google with a law that would have authorized publishers to charge the search engine for links to their Web sites, for example, the government backed down and accepted a negotiated deal that maintains Google’s existing business model, under which links are free.

The French data protection agency — which is known by its French initials, C.N.I.L. and is independent from the government — has been more forthcoming about the taxation proposal.

“Personal data are the fuel of the digital economy,” Edouard Geffray, secretary-general of C.N.I.L., told the French version of the online magazine Slate. “Given that, it would seem like a natural idea to envision taxing the use of them.”

While business models built on the promise of “Big Data” are proliferating, with established giants like Google and Facebook and a growing number of startups hoping to mine ever more detailed personal information to sell advertising or other services, so are concerns about the use of those data.

Article source: http://www.nytimes.com/2013/02/25/technology/french-tax-proposal-zeroes-in-on-web-giants-data-harvest.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: financial transactions, novel idea, organization for economic cooperation and development

Economix Blog: Lifting the Veil on the Fed’s 2007 Discussions

January 18, 2013 by NewsMaker Leave a Comment

Matthew Cavanaugh/European Pressphoto Agency The Federal Reserve building in Washington.

11:46 a.m. | Updated

The Federal Reserve has released the transcripts of its meetings in the pivotal year of 2007, when the housing bubble started to burst and the global financial crisis began.

The transcripts shed light on the decisions that Ben S. Bernanke, the Fed chairman, and other top officials — including Timothy F. Geithner, the current Treasury secretary, who was then president of the New York Fed — were making as the crisis began. They spent much of 2006 underestimating the risks facing the economy before changing tack in 2007 and undertaking the beginnings of an aggressive response.

The transcripts are being issued as part of the Fed’s normal schedule of releasing them publicly five years later.

Over the course of the day, four reporters for The Times — Binyamin Appelbaum, Peter Eavis, Annie Lowrey and Nelson D. Schwartz — will be reading and analyzing the hundreds of pages of documents. Mr. Appelbaum’s article is now online, and will continue to be updated through the day. Mr. Appelbaum, Ms. Lowrey and Mr. Eavis are also tweeting about the transcripts.

Here is a brief look at how that crucial year unfolded, from Mr. Appelbaum:

As the housing market, and then financial markets, and then the broader economy began to unravel, the Federal Reserve in the final months of 2007 moved from complacency to action, not in one smooth motion but in a series of herky-jerky steps. Fed officials struggled to understand what was happening and argued among themselves about how the central bank should respond.

In August, the Fed took the first steps to broaden the availability of funding for financial transactions, perhaps the most important role that it would play during the coming crisis. In September, the Fed lowered benchmark interest rates for the first time in four years, opening the second front in its economic stimulus campaign. And by the end of the year, the Fed had begun the first of what would become a host of new programs intended to pump money into financial markets.

Article source: http://economix.blogs.nytimes.com/2013/01/18/lifting-the-veil-on-the-feds-2007-discussions/?partner=rss&emc=rss

Filed Under: Economy News Tagged With: cavanaugh, fed chairman, financial transactions

DealBook: London Stock Exchange Revises Offer for Clearinghouse

December 24, 2012 by NewsMaker Leave a Comment

LONDON — The London Stock Exchange Group said on Monday that it had revised the terms of its takeover proposal for LCH.Clearnet, citing the changing regulatory environment.

The London Stock Exchange provisionally agreed to pay 15 euros, or $20, a share for 60 percent of LCH.Clearnet, independent clearinghouse for financial transactions. In March, the London bourse offered 19 euros a share, plus 1 euro per share as a special dividend to be paid in five years.

The companies said the changes followed discussions over coming regulation that could for the LCH to raise more capital and crimp profits . European regulators have been proposing stricter rules for clearinghouses to safeguard their operations, forcing them to increase their reserves.

Like rivals, the London Stock Exchange has looked to deals in the face of increasing competition and weakness in its core equity business. With LCH, the London exchange may benefit from regulatory changes, capturing the increasing volume of over-the-counter derivatives that will move to clearinghouses. The stock exchange currently outsources clearing activities to LCH.

Such businesses have been especially attractive in the current conditions. Last week, the IntercontinentalExchange agreed to pay $8.2 billion for NYSE Euronext to create a trans-Atlantic trading giant with a major focus on derivatives.

Under the revised plan, the London Stock Exchange would pay 14 euros per LCH.Clearnet share on completion of the transaction and 1 euro per share in 2017, which would replace the special dividend, the two companies said. Both payments would be in cash. The firms also agreed on extending their takeover negotiations until Jan. 31 to finalize the details of the offer.

Article source: http://dealbook.nytimes.com/2012/12/24/london-stock-exchange-revises-offer-for-clearinghouse/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: clearinghouses, financial transactions, london stock exchange

DealBook: Silver Lake and Partners Group to Buy Global Blue for $1.25 Billion

May 24, 2012 by NewsMaker Leave a Comment

LONDON — The private equity firm Silver Lake and the investment management company Partners Group agreed on Thursday to buy Global Blue, a tax-free shopping business, for 1 billion euros.

The deal, valued at about $1.25 billion, is one of the largest private-equity-backed leveraged buyouts in Europe this year. Private equity firms have completed debt-funded European acquisitions worth a combined $15.3 billion in 2012, a 35.5 percent decline from the period a year earlier, according to the data provider Dealogic.

Silver Lake and Partners Group are buying Global Blue from the private equity firm Equistone, which paid 360 billion euros for the company in 2007. Equistone previously was called Barclays Private Equity until it was acquired by its management team in 2011.

The deal will give the new owners of Global Blue access to the increasingly important luxury traveler market, as wealthy individuals from emerging markets and developed countries continue to spend despite the global financial crisis.

Global Blue, based in Nyon, Switzerland, has operations in more than 41 countries and works with about 270,000 retailers, according to the company’s Web site. Its businesses include tax-free shopping as well as financial transactions and foreign exchange services.

“Silver Lake and Partners Group’s impressive Asian footprints will also bolster Global Blue’s expansion initiatives in that important region,” Silver Lake’s managing director, Christian Lucas, said in a statement.

Article source: http://dealbook.nytimes.com/2012/05/24/silver-lake-and-partners-group-to-buy-global-blue-for-1-25-billion/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: data provider, financial transactions, global financial crisis

Italy Backs Financial Tax

January 15, 2012 by NewsMaker Leave a Comment

Italian Prime Minister Mario Monti on Wednesday threw his support behind a new tax on financial transactions, backing a push by Germany and France, but said he would prefer to have it apply across the whole European Union.

German Chancellor Angela Merkel and French President Nicolas Sarkozy have suggested such a tax among the 17-nation euro countries might be sufficient. But the Italian prime minister said he would rather have it applied across the full 27-nation EU — which would be more difficult because of British opposition.

“We are open to supporting this initiative at the EU level,” Mr. Monti said at a news conference with Mrs. Merkel during his first visit to Berlin since taking over from Silvio Berlusconi in November.

While the Berlusconi government had rejected a new financial levy outright, Mr. Monti has said he thought it was a good idea, particularly as a means of reducing the tax burden on families.

Mr. Sarkozy, who faces an election in April, has said France could even enact the tax unilaterally, but Germany has been more guarded.

Mrs. Merkel earlier this week, after meeting with Sarkozy in Berlin, said there’s no agreement yet on the tax inside her own governing coalition. She called for European leaders to clarify their stance on the matter by March.

The European Commission has estimated that the tax could raise as much as 57 billion euros ($77 billion) a year in Europe.

The tax would be a tiny percentage of the value of a trade — the French government proposed 0.1 percent on bonds and shares and 0.01 percent on more complex derivatives. Although some countries already have a minimal duty on share trading, the new proposal would not only increase the scope and size of the tax but also siphon off some revenue to Brussels.

There is no final decision yet, however, on what financial instruments would be taxed and whether currency trades — which make up a large slice of worldwide transactions — would be targeted as well.

Mr. Monti studied at Yale with the economist James Tobin, who first proposed the levy.

Mr. Monti’s meeting with Mrs. Merkel is the latest in a series of talks between European leaders. Following her talks Monday with Mr. Sarkozy, the German leader met in Berlin on Tuesday evening with International Monetary Fund chief Christine Lagarde. Ms. Lagarde was in Paris on Wednesday to speak with Mr. Sarkozy.

Mrs. Merkel and Mr. Sarkozy also plan to travel to Italy on Jan. 20 before a European summit at the end of the month.

Article source: http://feeds.nytimes.com/click.phdo?i=691dd0a3a4d2ec20c6e7c2fbb9dc9619

Filed Under: Economy News Tagged With: financial transactions, silvio berlusconi, tiny percentage

Insider Trading Accusations Against Swiss Banking Head

January 5, 2012 by NewsMaker Leave a Comment

The report by Weltwoche, a weekly magazine seen as having ties to the rightist Swiss People’s Party, which has been a critic of Mr. Hildebrand, said that in October he made 75,000 francs, or $79,600, from dollar trades. Mr. Hildebrand, the magazine said, acquired dollars before the Swiss National Bank, the central bank, announced measures in September to check the rise of the franc and protect Swiss exporters. The magazine cited copies of statements provided by an employee of a private bank where Mr. Hildebrand had an account.

Mr. Hildebrand did not immediately respond in detail to the report, but planned to make a statement Thursday.

Late last month the council that oversees the central bank said it had examined “rumors” about transactions made by Mr. Hildebrand or members of his family and found no wrongdoing. A report prepared for the council by PricewaterhouseCoopers, released by the central bank Wednesday, said the transactions — amounting to more than $2 million — were made in connection with family financial transactions like ones involving the purchase of real estate. The Pricewaterhouse Coopers report found no violations of central bank rules.

The accusations came as a shock in Switzerland and in central banking circles worldwide. Mr. Hildebrand is a familiar and respected figure in his home country, though some of his policy moves have drawn intense criticism.

Mr. Hildebrand, who spent part of his career at a New York hedge fund, is known internationally for his work drafting regulations, known as Basel III, that would oblige banks worldwide to limit their use of leverage to strengthen risk management.

The disclosure of the transactions immediately took on political overtones because of the involvement of the Swiss People’s Party in bringing the matter to light. The party, which campaigns on a platform of limiting immigration and keeping Switzerland out of the European Union, has been among Mr. Hildebrand’s most vocal critics.

“There have been disputes about monetary policy, but so far no one has questioned his integrity,” said Daniel Kübler, a professor of political science at the University of Zurich.

Noting that Mr. Hildebrand had pushed for more financial disclosure by top officials of the central bank, Mr. Kübler said he found it difficult to believe that the accusations were true. But he added, “If it is confirmed, then he must resign.”

Accountants from PricewaterhouseCoopers who examined records of the transactions said that some were profitable for Mr. Hildebrand but others lost money. The report did not calculate the total profit or loss, but its findings raise the question of why Mr. Hildebrand, who is wealthy, would risk his reputation for relatively little return.

Mr. Hildebrand has made enemies at home and abroad by pushing to impose rules on the country’s two biggest banks, UBS and Credit Suisse, that were tougher than those in other countries. He has also annoyed his former financial industry colleagues with his criticism of banker compensation and his advocacy of regulations to limit bank risk and prevent future financial crises. The rules have been endorsed by leaders of the Group of 20 largest economies.

In Switzerland, one of Mr. Hildebrand’s most vocal antagonists has been Christoph Blocher, a businessman who is perhaps the best-known figure in the Swiss People’s Party. In the past Mr. Blocher has accused the Swiss National Bank of squandering the country’s wealth with costly currency interventions and has demanded that Mr. Hildebrand resign.

The criticism has been muted since the bank announced in September that it would set a limit on the currency of 1.20 francs to the euro. The policy has been successful in keeping the franc, favored by investors as a haven from global financial turmoil, from rising to levels that would be ruinous for Swiss export companies.

Article source: http://www.nytimes.com/2012/01/05/business/global/05iht-snb05.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: accusations, basel iii, financial transactions

Swiss Central Bank Chief Faces Accusations of Improper Currency Trades

January 4, 2012 by NewsMaker Leave a Comment

FRANKFURT — Philipp M. Hildebrand, chairman of Switzerland’s central bank and a key architect of tougher global banking regulations, came under intense pressure Wednesday after a Swiss publication reported that he profited from currency trades made before and after he oversaw steps to prevent the Swiss franc from becoming too strong.

The report by Weltwoche, a weekly magazine seen as having ties to the rightist Swiss People’s Party, reported that in October Mr. Hildebrand made 75,000 francs, or $79,600, from the dollar trades. He had acquired dollars before the Swiss National Bank, the central bank, announced measures in September to check the rise of the franc and protect Swiss exporters, the magazine reported. It cited copies of statements provided by an employee of a private bank where Mr. Hildebrand had an account.

Mr. Hildebrand did not immediately respond in detail to the report, but planned to make a statement Thursday. Late last month the council that oversees the central bank said it had examined “rumors” about transactions made by Mr. Hildebrand or members of his family and found no wrongdoing. A report prepared by PricewaterhouseCoopers, released by the S.N.B. Wednesday, said the transactions — amounting to more than $2 million — were made in connection with such family financial transactions as the purchase of real estate. The firm found no violations of central bank rules.

Internationally, Mr. Hildebrand, who spent part of his career at a New York hedge fund, is known for his work drafting regulations, known as Basel III, that would oblige banks worldwide to limit their use of leverage to strengthen risk management.

The disclosure of the transactions immediately took on political overtones because of the involvement of the Swiss People’s Party in bringing the matter to light. In the past the party, which campaigns on a platform of limiting immigration and keeping Switzerland out of the European Union, has been among Mr. Hildebrand’s most vocal critics.

“There have been disputes about monetary policy, but so far no one has questioned his integrity,” said Daniel Kübler, a professor of political science at the University of Zurich.

Mr. Hildebrand has made enemies at home and abroad by pushing to impose rules on the country’s two biggest banks, UBS and Credit Suisse, that were tougher than those in other countries. He has also annoyed his former banker colleagues with his criticism of banker compensation and his advocacy of regulations designed to limit bank risk and prevent future financial crises. The rules have been endorsed by leaders of the Group of 20 largest economies.

In Switzerland, one of Mr. Hildebrand’s most vocal antagonists has been Christoph Blocher, a businessman who is the best-known figure in the Swiss People’s Party. In the past Mr. Blocher has accused the Swiss National Bank of squandering the country’s wealth with costly currency interventions and demanded that Mr. Hildebrand resign.

The criticism has been muted since the S.N.B. announced in September that it would set a limit on the currency of 1.20 francs to the euro. The policy has been successful in keeping the franc, favored by investors as a haven from global financial turmoil, from rising to levels that would be ruinous for Swiss export companies.

Bank Sarasin, an institution in Basel, Switzerland, where Mr. Hildebrand had an account, said Tuesday that one of its employees leaked information about the currency transactions to a lawyer close to the People’s Party. The employee, who was not identified, later met with Mr. Blocher, the bank said. The employee has been fired and has turned himself in to the police for violating bank secrecy laws, Bank Sarasin said.

The report by PricewaterhouseCoopers found that one transaction was made without Mr. Hildebrand’s knowledge by his wife, Kashya, the owner of an art gallery in Zurich.

Article source: http://www.nytimes.com/2012/01/05/business/global/05iht-snb05.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: financial transactions, hildebrand, private bank

DealBook: Europe Readies Plan for Tax on Financial Transactions

September 28, 2011 by NewsMaker Leave a Comment

Jonathan Fickies/Bloomberg NewsJosé Manuel Barroso, the president of the European Commission.

6:09 p.m. | Updated

BRUSSELS — The European Commission is expected to unveil a detailed plan on Wednesday to create a financial transaction tax, despite the opposition of several member countries and a formal acknowledgement that it could have a significant negative effect on the European Union’s gross domestic product.

The plan, which has the strong support of France and Germany, will be discussed in a speech before the European Parliament in Strasbourg, France, by José Manuel Barroso, the president of the commission, the executive arm of the European Union.

The measure will probably include taxes on the purchase of stocks and bonds; derivatives will probably be taxed at a lower rate. Transactions on the currency markets are not expected to be included.

Critics are expected to highlight a formal study regarding the proposal’s economic effects.

“With a tax rate of 0.1 percent, the model shows a drop in G.D.P. (minus 1.76 percent) in the long run,” according to a draft of the plan.