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Monday Newspaper Review - Irish Business News and International Stories - - July 28, 2014
By Finfacts Team
Jul 28, 2014 - 6:25 AM

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Irish Independent

THE dramatic drop in the number of higher-earners during the economic crash has resulted in middle-income earners having to carry the burden of income tax, a report has found.

The Economic and Social Research Institute (ESRI) says the reduction in the number of high-earners, as well as efforts by successive governments to protect social welfare, has resulted in the gap between rich and poor narrowing.

Between 2007 and 2011 the number of taxpayers with incomes over €100,000 a year fell by 14.7pc, according to the Distribution of Income and the Public Finances report by Prof John Fitzgerald, which is released today.

The total intake for the State from those earning over €100,000 fell by almost 27pc, while income from those earning over €275,000 fell by almost 40pc in this period.

Prof Fitzgerald said the decision by successive governments to ensure the welfare state remained "broadly unchanged", coupled with higher earners being "wiped out", had led to increased taxes for middle income earners and homes earning less than €100,000.

The Central Bank has given the go-ahead for investment funds to start lending to Irish businesses. It could put the funds in direct competition with the banks.

The Central Bank has published a consultation paper on "loan-originating alternative investment funds (AIFs)". The paper, the bank said, signals its intention to allow such funds to start lending directly to corporates.

Up to now the regulator has banned investment funds from lending directly to companies, but that is now changing thanks to European rules on banking regulations, known as CRD4.

The change is aimed at allowing funds to lend to businesses here that are too small to tap the bond markets themselves but which still require substantial funding of between €20m and €125m.

Probity

All regular banking regulation, such as fitness and probity tests for senior staff, will apply to these AIFs as well as a number of other regulations, including leverage limits, and "strict requirements on these funds to keep their investors well-informed on the lending they would do".

HOMEOWNERS in Dublin are in line for a full 15pc cut in their property tax next year, the Irish Independent has learned.

In another eight areas around the country, householders can also expect a cut, according to draft calculations for the Government.

A cut of up to 15pc in the rate will be possible in Meath, Kildare, Wicklow, Cork city, Cork County, Galway city, Kerry and Clare.

The proceeds of the property tax will go directly to councils next year, when local authorities will have the power to cut or increase their property tax rates by 15pc. The 12 councils can cut the rate because they will have a surplus of funding in 2015, when the benefits of the property tax are felt locally.

The other 19 councils will have the same amount of money as this year, so won't be able to cut their property tax rate.

Public Spending Minister Brendan Howlin has confirmed to the Irish Independent that a number of local authorities will have enough funds from the property tax to cut the rate for homeowners.

Irish Times

Minister for Agriculture and Defence Simon Coveney has said the forthcoming budget will help “middle Ireland”, particularly the cohort he described as “my generation”, which is struggling with debt and negative equity.

Mr Coveney (41) said the Government had blundered over the last six months but would demonstrate a fresh agenda-setting energy ahead of the October budget.

“We recognise that it is actually middle Ireland here – my generation – who have lots of debt that they’re still trying to manage and cope with, who are living in many cases in negative equity,” he said. “They are struggling to pay the bills . . . they’re the people that need a break now.”

A billionaire media tycoon with close links to US president Barack Obama has urged investors to sell the shares of companies that shift their headquarters to countries such as Ireland to cut their tax bills.

The pointed remarks over the weekend by Mark Cuban, owner of the Landmark Theatres cinema chain and the film distributor Magnolia Pictures, will add fuel to the debate raging in the US over so-called tax “inversion deals”.

With such inversion arrangements, US firms buy a smaller company, often headquartered in Ireland, and shift their domicile to this country to avail of our lower 12.5 per cent corporation tax rate.

A senior Aer Lingus executive has begun court action to prevent his removal from his position, following an alleged dispute with other senior executives at the airline.

The row is the latest signal of upheaval among the most senior leaders of Aer Lingus, which is also losing, or has recently lost, its chief executive, chief financial officer and head of human resources.

Michael Gannon, director of product and brand development, will this week ask the High Court to give him an injunction preventing his removal. It is understood that the high-level management row is related to disagreements over operational matters and does not centre on allegations of misconduct by any individual.

Irish Examiner

The macroeconomic imbalances that wrecked the Irish economy from 2008 onwards would have been flagged as needing urgent attention in 2005 under existing procedures, according to the Central Bank.

In a new paper produced by Central Bank economists Ronan Hickey and Linda Kane, it noted that the economic governance rules in place before the crisis erupted were hopelessly inadequate.

The Stability & Growth Pact did not monitor macroeconomic imbalances that were in the years leading up to 2007 becoming a huge problem in countries such as Ireland.

This country experienced a massive surge in credit and house price inflation while at the same time there was a steep losses in competitiveness.

Even though Ireland’s fiscal position met the Stability & Growth Pact criteria and unemployment was at the lowest level in the history of the State, as the imbalances blew up, this would cause a surge in public indebtedness and unemployment.

Europe

Euro Topics: Disaster worsening with each minute that passes: A ceasefire in Gaza is needed as quickly as possible, the conservative Turkish daily Milliyet urges: "With every hour and minute that passes the disaster worsens. ... A lasting ceasefire in which the weapons are stilled so that the injured can be tended to and a political solution sought must be achieved now. ... Quite honestly this is not the right time for a debate about whether the prerequisites for negotiations must be fulfilled first for a ceasefire to begin, or whether the ceasefire must come first and then the negotiations. But clearly the mediators have been having this discussion with the conflicting parties for three or four days now. ... The solution to this age-old conflict lies not in a military front; it must be found through political channels. A ceasefire should not be a brief 'pause' in the attacks. All sides, including Hamas, must use political channels to reach an agreement that should be a 'new start'."

Arab world passive on Gaza: The biggest protests against Israel's offensive in the Gaza Strip aren't taking place in the Middle East but in Europe, a situation that has much to do with the political configurations three years after the Arab Spring, the liberal German daily Tagesspiegel believes: "The region is becoming increasingly divided into hyper-authoritarian police states on the one hand and failed states on the other. ... Absorbed with their own downfall, the failed states like Syria, Iraq, Lebanon and Libya are completely caught up in their own affairs. The authoritarian states like Egypt, Saudi Arabia, Kuwait and the Emirates basically tolerate no domestic dissent whatever these days. ... At the same time their leaders are doing all they can to throttle the Islamist movements which they see as the main cause for the downfall of the region and a huge danger to their own rule."

Johan Ehrenberg on melting nations: The independence movements in Scotland, Catalonia and eastern Ukraine have triggered a debate about whether in future there will be more nation states than there have been up to now. However the founder and publisher of the left-wing Swedish daily ETC, Johan Ehrenberg, sees the nation and nationalism as outdated concepts: "We live in nations that have become less and less interesting through globalisation and technology. A functioning local economy is more important for inhabitants than the Reichbank's defence of the 'Swedish currency'. A global environmental movement is more important for our future than an inquiry by the [Swedish] energy authority. Because the nations are growing weaker, nationalism is naturally gaining new breeding grounds. But it doesn't stand a chance if the socialists stress the need for federalism and cooperation. It is passé. It ended long ago, even if we haven't yet noticed the movement under our feet: the nations are softening and melting away."

 


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