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Monday Newspaper Review - Irish Business News and International Stories - - September 22, 2014
By Finfacts Team
Sep 22, 2014 - 2:53 PM

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Irish Independent

The family of the late Charles Haughey has strongly disputed claims that he missed a Budget speech after having been assaulted with an iron bar.

In a statement released last night, the former Taoiseach's family said the story related by Dr TK Whitaker - regarding injuries sustained by then finance minister Mr Haughey in 1970 that forced him to miss the Budget speech - was "patently untrue."

They said the claims were "highly hurtful" and said they were "deeply disappointed and saddened" by them.

The Haughey family said they are also "deeply disappointed and saddened" that a highly respected civil servant like Dr Whitaker should write something that "caused great distress to Maureen Haughey and her family".

The claims are included in a new book on Dr Whitaker which was first reported by the Irish Independent on Saturday.

Israel's finance and economy ministries on Monday approved a plan by Intel Corp to invest $6bn in the upgrade of its chip manufacturing plant in the southern town of Kiryat Gat.

Intel will receive a government grant of $300 million over five years and will be eligible to pay a corporate tax rate of only 5pc for a 10-year period, the finance ministry said.

The US chip giant plans to hire close to 1,000 more workers at the plant by 2023, in addition to the 2,500 that already work there.

Intel recently revealed that it has spent $5bn (€3.6bn) in the last three years upgrading its Irish plant. The company has not yet revealed what the updated plant will manufacture.

However, at the time that news of the Israeli investment broke, peculation grew that Israel had won the race to manufacture the company's new 10-nanometre technology, seen as the core product in the company's immediate future.

WORKING families can expect a double reduction in their income tax under plans being considered by Finance Minister Michael Noonan.

It is expected workers will be able to earn more before they enter the top rate of tax, combined with a reduction to the flat rate.

Government sources from across the Coalition confirmed to the Irish Independent last night that they are looking at a "hybrid approach" to deliver its well-flagged vow to alleviate the burden of taxes on workers.

Taoiseach Enda Kenny and many in Fine Gael favour a straight cut to the top rate of income tax, from 41 pc to 40 pc.

But the Labour Party are pushing hard that any measures introduced must alleviate the burden for lower- and middle-income earners.

Irish Times

The Irish Fiscal Advisory Council warns in its pre-budget statement it will become politically difficult as memories of the economic crisis fade to sustain the fiscal discipline needed to reduce the national debt.

In a 20-page report in which it calls on the Coalition to maintain a “prudent” fiscal stance in the budget next month, the council questions whether the correct course now is to scale back on what was to be the final big push in the settled plan to assert control over finances.

“There is a risk that public fatigue with prolonged fiscal retrenchment could make it difficult to achieve the primary surpluses needed to reduce the debt-to-GDP [gross domestic product] ratio significantly,” says the statement.

The OECD describes current corporate tax arrangements as “double non-taxation”. That’s quite a damning statement. The drive for a more rational global corporate tax structure has three related themes: first, governments are strapped for cash; second, companies are not; and, third, technological change means that finance ministers are finding it next to impossible to tax that pot of corporate cash. They are not even sure where it is.

If “follow the money” is sensible advice, then Ibec’s suggestion that we get ahead of the corporate tax reform curve is a good one. Many observers have already been surprised by the speed with which the OECD is moving to promote change, to find and tax multinational profits.

The debate over corporate tax reform touches many contemporary controversies. One of the little-noticed aspects of the rise in global income inequality is the extent to which it has been driven by the increasing income (and wealth) of corporations. The share of the economic pie that accrues to firms has been rising for years in many – most – economies, at the expense of workers. Even uber-capitalists recognise that this cannot continue without limit.

Pragmatic governments, desperate for new sources of tax revenues, salivate over an obvious pot of cash, albeit an elusive one.

Struggling European economies should learn from how Ireland put its economy into recovery mode, the Financial Times says in an editorial in today’s newspaper, arguing that Ireland provides “growing evidence of how countries that shape up after a crisis can recover strongly despite an unfavourable international outlook”.

“Few countries soared as high or crashed as hard,” the newspaper says. However, a combination of “the toughest choices” for the country’s “long-suffering people” and the rebuilding of the banking sector, means that the economy is now in recovery mode.

Noting while countries such as France and Italy stagnate, “while bickering about long overdue reforms”, Ireland has posted an “astonishing” second quarter growth rate, “a pace unseen since the heady days of the early 2000s”.

Irish Examiner

Bundesbank president Jens Weidmann has said the room that governments have to stimulate growth through fiscal policy is often more limited than commonly believed.

Fiscal leeway “is usually much smaller than many think”, Weidmann told reporters in Cairns, Australia.

“It is limited by European rules, national rules, it is impacted by high debt levels, the demographic burdens we will face, but also by the credibility of a sustainable fiscal policy.”

“And that’s true specifically for Germany, which has to cater to its role as confidence anchor in the monetary union,” he said after a meeting of G20 finance ministers and central bankers in Cairns.

Policymakers including US treasury secretary Jacob Lew have urged Europe to bolster demand, with Canadian finance minister Joe Oliver saying some European countries should consider additional fiscal measures.

Europe

Euro Topics: Around 100,000 Syrian Kurds fled over the border into Turkey on the weekend to escape fighting between IS terrorist militias and Kurdish troops, according to UN sources. At the same time 49 Turkish hostages who had been held by the IS in Iraq were set free. That should put an end to Ankara's hesitancy in supporting the anti-IS coalition, commentators write, but warn of the risks of intervening in Turkey's neighbouring countries.

Turkey between a rock and a hard place: After the release of the Turkish hostages by the IS on Saturday, the question of Turkey's joining the anti-IS alliance is all the more pressing. The country faces the choice between a rock and a hard place, the Swiss daily Tages-Anzeiger comments: "Until now Turkey has kept its distance from the coalition against the IS fighters, justifying this stance by pointing to the lives of the 49 people who were kidnapped in Mosul over three months ago. Now the Turkish hostages are free. So the pressure on the conservative Islamic government to join the international fight against the IS terror should now rise. So far Turkey has only committed to sending humanitarian aid. Now it's facing a dilemma: if it joins the conflict, the IS terrorists may once again threaten to carry out attacks in Istanbul. If it doesn't, and if it goes on refusing to let its air bases be used in the fight, the situation on its doorstep could escalate even further."

France's ex-president Nicolas Sarkozy confirmed his return to politics on Sunday in a televised interview. But the return of the Socialists' favourite foe is by no means good news for the left, the online magazine Slate warns: "His return is bad news because it's also the return of anti-Sarkozyism and of the left's ideal adversary. ... If anyone, Sarkozy is the man who can rekindle the Socialists' hopes for [the presidential elections of] 2017 and make them forget the economic and political reality. … Above all, Sarkozy is an excuse for them to be intellectually and politically lazy. … But while he's their favourite enemy he's also their greatest threat: both the perfect bogeyman and the man who stopped them from asking serious questions about political responsibility. It was he who prevented the left from trying to think through a social project that would mobilise popular support in the long-term."

Lithuania knows how to attract investors: According to statistics published in the Financial Times, foreign direct investment in Lithuania rose by 25 percent in the first six months of the year while it dropped in other countries of Central and Eastern Europe. Business magazine Verslo žinios is overjoyed: "The number of projects of this type went down the most in Latvia, a drop of 67 percent. And Estonia is not doing so well either - it has 44 percent fewer projects than in the first half of 2013. ... Investments in the design branch as well as in software development and testing have risen considerably [in Lithuania]. ... Lithuania has taken over the other countries in the region not just regarding the number of projects it attracts, but also in terms of jobs created by foreign investors. This is a very encouraging trend."


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