September 17, 2019

Italy’s Premier, Monti, Offers Plan in Euro Crisis

At a time of international financial instability that is threatening the euro currency, and with the eyes of world markets on Italy, Mr. Monti, an economist and former European Commission member, said his government would work to change Italy’s labor market and pension system, fight tax evasion and make it easier for businesses to grow. But he also urged Europe to understand what is at stake if it leaves Italy to its own fate.

“The future of the euro depends on what Italy does in the next few weeks. Partly, not only, but partly,” Mr. Monti said, warning that “the end of the euro would unravel the single market, its rules, its institutions, and would take us back to where we were in the 1950s.”

At the same time, he urged lawmakers to back his “government of national commitment.” The Senate and the lower house were expected to give his government a vote of confidence later.

Mr. Monti said in no uncertain terms that Italy was in economic difficulty and needed to act fast to strengthen its own finances and by extension shore up the euro. It was a marked change from the tenor of the previous government, under Prime Minister Silvio Berlusconi, in which acknowledgment of Italy’s economic woes was considered disloyalty, and where as recently as two weeks ago Mr. Berlusconi said that Italy was a wealthy country where “restaurants are full of people.”

By contrast, Mr. Monti said Italians could expect to make sacrifices in the months ahead, but pledged that those sacrifices would be fair, and evenly spread. Such measures would involve changes to the labor market and welfare benefits, and to Italy’s lopsided pension and fiscal systems.

Addressing what he called a fundamental cause of Italy’s low growth, he said the government would work to grant young people and women greater access to the workplace. “They are the two great wasted resources of the country,” he said.

He said the government would work to restore market confidence in Italy in the short term and to invest in structural changes that would help in the longer term, including changes to what he called Italy’s “inequitable” pension system.

“We need to focus on three pillars: fiscal rigor, economic growth and social fairness,” Mr. Monti said.

To spur growth, he said Italy must deregulate closed professional guilds, opening them to competition, as well as improve the efficiency of public sector services.

Striking a statesmanlike tone, Mr. Monti also said that because citizens were being asked to sacrifice, cuts to the costs of elected officials as well as public administration would be “unavoidable.”

He also indicated that to bring Italy more in line with European norms, his government would probably have to reintroduce a property tax on first homes, a tax that had been scrapped by Mr. Berlusconi’s government.

Mr. Monti also pledged to fight Italy’s vast underground economy, which he said was estimated to be worth a fifth of the annual gross domestic product, and to tackle tax evasion, a task that he said would lead to the reduction of fiscal pressure on businesses and fixed-income employees and pensioners.

Mr. Monti did not try to sanitize the challenges facing Italy. Growth has lagged for a decade, he said, youth unemployment is higher than in other European countries, and the disparity between the wealthier north and the poorer south has narrowed only slightly.

Markets have been hammering Italy in recent weeks, driving up borrowing costs to levels that have caused other euro zone countries to seek bailouts, on concerns about Italy’s longer-term ability to repay its enormous debts.

Mr. Berlusconi was forced to resign on Sunday when it became clear last week that international investors had lost confidence in his government’s ability to push through reforms demanded by the European Union. Mr. Monti was recruited to replace him in record time, and on Wednesday, President Giorgio Napolitano swore in the new government, which consists mostly of academics, bankers and top-level civil servants, all experts in their fields.

Commentators in Italy welcomed Mr. Monti’s speech.

“He gave a political framework,” said Stefano Folli, a political commentator for the daily business newspaper Il Sole 24 Ore.

Mr. Folli said Mr. Monti’s message was that “Italians will have to make fairly serious sacrifices, but that those will be compensated for by a government that wants to restore a sense of the state and trust in institutions.”

While respected abroad, the Monti government is more problematic internally, where many factions in Parliament, most notably the one led by Mr. Berlusconi, speak of it as an imposition born of financial markets more than democratic processes.

In his speech, Mr. Monti reiterated that his government had not subverted the role of politics. Instead, he said that he hoped its apolitical nature would help Parliament regain a measure of concord after a particularly tumultuous period and “reconcile citizens and institutions to politics.”

Article source: http://www.nytimes.com/2011/11/18/world/europe/confronting-economic-emergency-new-leader-in-italy-mario-monti-offers-ambitious-plan.html?partner=rss&emc=rss

Credit Suisse to Pay 150 Million Euros to Settle German Tax

“A complex and prolonged legal dispute has been avoided, with an agreed solution that provides legal certainty,” the bank said in a statement.

Later this week the German and Swiss governments are looking to sign a deal on taxing money stashed by German citizens in secret Swiss accounts, a German government source told Reuters on Sunday.

The terms of the deal were struck in August when Switzerland and Germany agreed to tax money held by German citizens in secret accounts, estimated at up to 150 billion Swiss francs.

The agreement could set a model for agreements between Switzerland and other countries, although they still require the approval of the Swiss and German parliaments.

Credit Suisse has come under increasing scrutiny from prosecutors in Germany this year.

In August Duesseldorf’s chief prosecutor Ralf Moellmann said his office intended to intensify its probe of Credit Suisse, after the bank’s offices in Germany were raided in February as part of a broader clampdown on tax evasion.

Credit Suisse’s payment is higher than that of smaller rival Julius Baer, which earlier this year agreed to pay German tax authorities 50 million euros to close a tax probe and avoid potential legal action against the bank and its employees in the country.

Credit Suisse is also the target of a formal U.S. tax probe, and a number of current employees and former employees have been charged with helping U.S. citizens dodge U.S. taxes.

The United States is also pushing for a deal similar to the one struck on UBS client data two years ago, seeking details of all U.S. clients with accounts worth at least $50,000 (31,772.26 pounds) between 2002 and 2010 at banks including Credit Suisse, Julius Baer and Wegelin as well as some regional banks.

(Editing by Greg Mahlich)

Article source: http://www.nytimes.com/reuters/2011/09/19/business/business-us-creditsuisse.html?partner=rss&emc=rss

Lawyer Convicted of Tax Evasion Seeks New Trial

Opinion »

Perry and Bush’s Legacy

In Room for Debate, how Perry differs, and whether that could hurt the G.O.P.

Article source: http://feeds.nytimes.com/click.phdo?i=52059e0313d1eac8e03169df46fd60a0

A UBS Customer Pleads Guilty to Tax Evasion

The former lawyer, Kenneth Heller, banked the money with UBS and then moved it to a smaller private Swiss bank, Wegelin, in June 2008 after reading that UBS might identify account holders, federal prosecutors said.

Mr. Heller is the sixth person to plead guilty to criminal charges of tax evasion out of seven charged in April 2010. He faces a possible maximum prison term of 15 years after his guilty plea before Judge P. Kevin Castel of United States District Court in Manhattan. Sentencing was scheduled for Sept. 27.

In February 2009, UBS entered into a deferred prosecution agreement with the United States, admitting it had helped taxpayers hide accounts from the Internal Revenue Service.

As part of the agreement, UBS provided the government with names and account information for a number of United States-based account holders whom bank employees had helped to hide their money to avoid paying taxes.

The indictment against Mr. Heller said he had opened a UBS account in the name of a sham offshore company in December 2005. The next month, he wired $26.4 million from the United States to the account and his name did not appear as the account holder on UBS documents.

Article source: http://feeds.nytimes.com/click.phdo?i=cae1307ac8cac6c5839603dfa1f4909c

Europeans Doubt Greece’s Ability to Stick to Budget

But some things are harder to change. Asked if the state had the means, let alone the will, to properly collect taxes, Froso Stavraki, the head of the collectors’ union, took a long drag from a cigarette. “Huge efforts have been made,” she said in an interview in a cafe here last week. “But no, I don’t think people are afraid of us.”

A year ago, Prime Minister George Papandreou hammered out a $155 billion loan agreement with the European Union, European Central Bank and the International Monetary Fund. In return, Athens pledged a range of structural reforms: cracking down on tax evasion, raising the retirement age to 63 and a half from 61 and a half, limiting early retirement and opening the so-called closed professions whose guilds grant limited access to newcomers.

Now, as he comes back to Greece’s foreign creditors asking for the next $16.8 billion installment of aid — predicated on persuading Greeks to accept more tax hikes, wage cuts and the privatization of more than $71 billion in state assets before 2015 — doubts have emerged about the government’s ability to implement and enforce the measures it has already passed.

“The main problem is that he’s only been able to deliver on the parts of the austerity package that are easily enforceable and transparent and irrevocable,” such as cuts to public sector salaries and pensions, said Spyros Economides, a political scientist who co-directs the Hellenic Observatory at the London School of Economics. “Unfortunately, the rest of it is a complete mess.”

“It’s very easy to legislate,” Mr. Economides added. “The problem is to enforce legislation. There’s no enforcement mechanism. It’s all done for the eyes of the public.”

On Sunday, finance ministers from the euro zone will meet in Luxembourg and are expected to approve the next dispersal of aid. But if Mr. Papandreou fails to push through the new austerity measures that Parliament is expected to begin debating next week — with a confidence vote scheduled for Tuesday following a cabinet reshuffle last week — it could jeopardize the second rescue package that Greece needs in order to carry it through next year. A default would send the euro zone and world markets into a tailspin.

In March, Greece fired its top tax official on the grounds that he had not increased tax revenues enough. In 2010, Greece brought in 52.5 billion euros in tax revenue, up only marginally from 50 billion euros in 2009.

The country failed to collect on another 40 billion euros in back taxes owed in 2010, Ms. Stavraki said. “The problem is that most usually pay 20 percent of what they owe, and then they disappear,” she said.

To try to break what Ms. Stavraki described as a “personal, human” rapport that many Greeks have with their tax collectors, the state is reducing the number of collection offices to 72 from more than 200, and introducing a centralized electronic database system. But it has also cut the salaries of tax collectors, a move some say could encourage corruption. “Morale is low,” Ms. Stavraki said.

Adding to the difficulties, as the panic and uncertainty spreads, Greeks continue to take their money out of local banks. According to data from the European Central Bank, Greek banks lost 4 billion euros in deposits in May, following 2.4 billion in losses in April — part of a bank run that has seen an estimated 60 billion euros, a quarter of Greece’s gross domestic product, leave the country since the crisis began.

In February, the government passed a much-publicized law that removed the barriers to some of the so-called “closed professions, which range from truck drivers to pharmacists to engineers.

Powerful guilds essentially control who can get a license to practice in those professions, a system critics say rewards connections over merit.

Niki Kitsantonis contributed reporting from Athens, and Landon Thomas Jr. from London.

Article source: http://feeds.nytimes.com/click.phdo?i=9eb679fc3545d2c7eec3cddf72156d72