The Irish Independent reports that the Government is set to crack down on high earners who use tax and property reliefs to limit their liabilities and swell their pension funds.
With an increase in the number of people earning huge salaries - over 300 individuals will earn in excess of €1m this year - the Budget will contain measures to cap the amount of tax relief which an individual can use to shelter their income from tax, Minister for Finance Brian Cowen signalled yesterday.
Addressing a meeting of the Leinster Society of Chartered Accountants in Dublin yesterday, Mr Cowen said a review of various tax reliefs was aimed at bringing "equity" to the system.
He said he wanted to strike a balance between the proper use of incentives and ensuring that "a relatively small number of people who have high earnings do not benefit to an extent which cannot have been envisaged when the incentives were put in place."
Earlier this month the Pensions Board suggested that the burden to the Exchequer of providing additional pension relief to lower earners could be recouped by capping the contributions of high-income earners, both their own and their company's.
The Pensions Board report indicated that many wealthy people are building up huge pension pots while reducing their tax liabilities, because they can contribute up to 30pc of income after age 50.
Mr Cowen said pensions reliefs already cost the Exchequer €2.7bn a year.
He said that he has commissioned reviews of two dozen tax reliefs and incentives and that the results are being considered in the context of the Budget.
CHILDCARE
But he indicated that at least one relief may be extended, when he said that the issue of childcare and the shortage of places "need to be addressed on the supply side."
As there are already incentives available to the investors in childcare facilities, this may indicate an extension of these reliefs to investors, rather than the direct tax relief to parents using the facilities. Taoiseach Bertie Ahern has already come out in favour of a rise in the childrens allowance, rather than giving parents direct tax reliefs on the cost of childcare provision.
Mr Cowen said the current review of tax reliefs was "aimed at a range of special reliefs generally introduced to facilitate or incentivise particular types of economic activity."
He would be seeking to achieve a balance between the needs of the economy and the need for more "equity in the system."
The Irish Independent also reports that telecoms giant BT said yesterday it will fight the Government all the way to Europe if it goes ahead with plans to re-enter the telecommunications market as the move would be "anti-competitive".
Danny McLoughlin, the chief executive of BT's operations in Ireland, Northern Ireland and the regions, said the company would be "very against" such a development as the Government would be able to cross-subsidise one division of their services to another.
He added that this is not how a Government should intervene to sort out problems in relation to broadband, or any other area.
The Government is studying a plan to marry together its assets, like ESB Telecoms and Iarnród Éireann, which could be used to provide potentially lucrative telecoms services like broadband and compete against existing operators like BT Ireland and Eircom.
Mr McLoughlin added that there are more productive ways for the Government to benefit from its assets. "Telecommunications operators could pay to use the services or simply buy the assets, for example. I would hope it would not go to court and that common sense would prevail."
The ultimate destination to deal with such a hearing would be the EU courts in Luxembourg.
Announcing BT Ireland's six-month results to end September 2005, he said that the current state of broadband services in Ireland is the "big negative" in the economic story here, and that the slow rollout of local loop unbundling (LLU) is affecting Irish competitiveness.
LLU is access to the last line of network from Eircom's local exchanges into homes and offices. Opening it up to competitors is the key to introduction of more broadband services.
Mr McLoughlin said that Eircom has been too long hampering competition.
He pointed out that Romania has now bypassed Ireland in terms of broadband penetration.
Ireland came 19th out of 22 OECD countries in a recent broadband survey with about 160,000 fast internet access services countrywide.
FAST-TRACK
He said the Government must fast-track legislation it is planning to introduce that would give telecoms watchdog ComReg stronger enforcement powers over Eircom in speeding up broadband rollout.
He added that we would need to see legislative progress within the next six months to avoid Ireland being left behind in the broadband stakes.
According to Mr McLouglin, while there would be no guarantees that a potential takeover of Eircom by Swisscom would benefit broadband rollout, it may mean the change in attitude that is necessary.
The Irish Times reports that the Republic's second biggest bank is to introduce free banking for current account customers who meet certain requirements.
Bank of Ireland, which has 750,000 current account customers, says those who maintain a €500 balance and use its internet bank to do three online transactions every quarter will not pay any fees.
The bank's chief executive, Brian Goggin, said that he expects about 65 per cent of its current account customers, or almost 500,000, will qualify for free banking. The bank says on average its current account customers pay annual fees of about €49.
If these customers all qualify, Bank of Ireland will forego about €24 million in fees annually, equal to just over 1 per cent of the group's annual profits. The actual cost to the bank will depend on the take-up.
Bank of Ireland has also introduced a range of free banking services for two years for new start-up business customers. The initiatives are part of a "changing for you" customer programme that includes a promise that customers will not have to wait more than three minutes to be served at any of its branches.
Mr Goggin says this will be achieved by placing 500 new staff in customer services roles, simplifying the most common transactions such as lodgement and withdrawal transactions, and enhancing its telephone and online banking services.
"All banks are not the same. We want customers to see that difference when they deal with Bank of Ireland" he said yesterday. "I believe that by improving services and facilities in line with what the customers deem important to them, we will differentiate ourselves from our competitors."
Permanent TSB and National Irish Bank already offer free banking to current account customers. A switching code, aimed at making it easier for customers to move their bank accounts, has also been adopted by the industry and has prompted some movement in the market.
AIB said its current account proposition is constantly under review, but that it has no plans to change its offering in the short term.
Bank of Ireland claims to interact with over 40,000 of its customers every hour through its 265 branches and its telephone and online banking operations.
Some 6,000 Bank of Ireland staff have undergone training and coaching in customers service and it is operating an emergency helpline for customers.
The bank says that 480,000 customers have registered with its online bank and claims customer numbers have been increasing on average by 5,000 a month.
Bank of Ireland will be writing to its current account customers to inform them how they can register for the new free banking account.
They will retain their account number and existing laser or ATM cards.
The new accounts will allow customers to view payments, transfers and direct debits online. They will also be able to view mortgage, savings and SSIA accounts.
Bank of Ireland is also remodelling 90 of its branches over the next three years to improve the layout and offer more privacy to customers.
Two have already been completed, Little Island in Cork and Portumna, County Galway.
"Over the coming weeks and months, customers will see the introduction of a number of changes designed to improve the quality and range of our services," Mr Goggin said.
B of I's abolition of fees: Page 3
AIB has no plans to make any of its staff redundant or to make any radical changes to its branch network, according to the bank's chief executive, Eugene Sheehy.
Announcing the next phase of the bank's partnership agreement with the financial union, the Irish Bank Officials' Association (IBOA), Mr Sheehy said AIB wants to hold onto its position as Ireland's biggest and most successful bank.
"We are pretty committed to the way we are going," he said.
He added that the bank was currently a net employer and was seeking to fill several positions.
Following months of negotiations, AIB said that it had finally reached an agreement and was about to embark upon the next stage of the partnership agreement between the two groups.
By contrast with the original agreement, established in February 2002, the new arrangement will aim to form a closer link between the industrial relations agenda and the strategic principles of the bank; expand the development of the partnership to include local management and IBOA representatives; and to promote a strategy based on increased communication.
The Irish Times also reports that Dublin City Council is proposing to start charging disabled people for parking in an attempt to stop what it says is the "wholesale abuse" of the disabled parking permits system.
The number of family and friends misusing the free parking permits was causing "serious concern" among local authorities, the city's director of traffic, Owen Keegan, said last night.
Evidence had also emerged that permits were being stolen for use by able-bodied drivers and, in the event of a disabled person's death, their next-of-kin often did not surrender the permit but continued to use it on their own vehicles, he said.
Doctors were also implicated by Mr Keegan in the abuse of the system. To qualify for a permit an applicant must have a medical certificate signed by their GP confirming their disability. There was evidence, he said, that GPs were signing forms for people who were not disabled or doctors were being "overly generous" in their assessments of the patient's condition.
The system was impossible to enforce because permits were not restricted to a particular registration number but could be used in any vehicle in which the holder was travelling.
Numerous examples had come to the attention of the council. Clampers had reported commercial vehicles such as builder's and roofer's vans displaying disabled permits, as well as "branded" cars and vans covered in advertising, often left in parking spaces all day.
People who found it difficult to secure parking outside their homes were increasingly contacting the council to inform on neighbours who had permits but were not disabled.
There had also been a very significant increase in the numbers applying for permits with the increase in parking charges in recent years and National Toll Roads had already started charging permit holders to use the East Link Toll bridge, because of the level of abuse, Mr Keegan said.
The current exemption from paying on-street parking charges should be removed, he said, but as a concession once the disabled person has paid the minimum charge (usually equivalent to three hours parking) they can continue to park in the space for the rest of the day. The council is to put its proposals to public consultation in the coming months.
The Irish Examiner says that continued controversy over the Government’s chief scientific adviser, Dr Barry McSweeney, will be an embarrassing setback for the entire scientific community, one of Ireland’s most respected academics has said.
Speaking exclusively to the Irish Examiner, former University of Limerick President and Science Council chairman Professor Ed Walsh said unless the matter was resolved, doubts about the authenticity of Dr McSweeney’s PhD would damage Ireland’s scientific standing.
The PhD was obtained in 1992 from Pacific Western University (PWU), which is renowned for selling degrees.
“The unfortunate reality is that the authority and credibility of Ireland’s first chief scientific adviser, is being seriously damaged as a result of the queries raised during the past many weeks about the source of his doctorate,” said Professor Walsh.
“At a stage when Ireland is commencing to make its scientific mark, the controversy, if it remains unresolved, can grow into a significant setback and an international embarrassment to the scientific community.”
Professor Walsh’s comments carry considerable weight as he chaired the top-level Government International Commission of experts, which originally recommended the establishment of the office of chief scientific adviser. He was also the chairman of the Irish Council for Science, Technology and Innovation.
Despite his criticism, Professor Walsh also paid tribute to Dr McSweeney, saying he had displayed “remarkable managerial and strategic capabilities”.
Professor Walsh said it was not inconceivable that someone with “the right track record” could “admirably address the challenges of the post”.
But he said certain “key roles” required qualifications that were “beyond reproach if the person and the community represented are to retain the respect of peers and exercise authority”.
“A country’s chief scientific adviser is an iconic figure amongst the national and international scientific community,” he said.
“It would be expected that the academic qualifications of the person holding such a position be beyond reproach.”
On Wednesday night, Enterprise Minister Micheál Martin met with Dr McSweeney for a second time but, in the interests of due process, is refusing to comment.
Dr McSweeney has declined to speak to the Irish Examiner, but told another newspaper yesterday that he stood by his PhD and thought he still had the support of the Government.
The Financial Times reports that Man Group, the UK financial services company, on Thursday won the auction for Refco's futures arm with a bid of $323m including debt.
Man fought off a rival offer from Cerberus Capital Management for the business which was put up for sale after Refco disclosed an accounting problem that quickly forced it into bankruptcy.
Phillip Bennett, the brokerage group's former chief executive, was on Thursday indicted on securities fraud charges and ordered by prosecutors to forfeit alleged proceeds of more than $700m.
The FT also reports that Charlie McCreevy, European Union internal market commissioner, on Thursday dismissed calls to harmonise national tax regimes, arguing that it was "healthy" for national governments to compete for foreign investment by offering low corporate tax rates.
"Tax harmonisation is not on the agenda, nor will it be," Mr McCreevy said in a speech in Brussels.
"National vetoes will be retained and competition between member states for inward investment - some of it tax based - will continue. Tax competition is a healthy spur to governments across Europe," he said.
But Mr McCreevy also voiced criticism of the Commission's narrower drive to harmonise the corporate tax base, a move expected to simplify tax calculations and increase transparency but which some fear would pave the way to harmonisation of rates. Lazlo Kovacs, EU tax commissioner, revealed last month that he plans to formally propose a single EU tax base within 3-4 years.
"I am emphatically opposed to tax harmonisation - be it by the front door or the back," Mr McCreevy said.
Mr McCreevy stressed that the obstacles standing in the way of a harmonised tax base were virtually insurmountable: "To establish a common tax base we will need first to get agreement on what constitutes taxable profits. Assuming we can agree on [this] during our lifetime, we will probably then have completed one third of the journey. The harder bit comes next."
It is rare for commissioners to publicly cast doubts over the policies of their colleagues, but Mr McCreevy said: "I didn't come to the Berlaymont [the Commission headquarters] to tiptoe about in my slippers. I do not believe either in walking down the corridor with a blindfold on, muffs on my ears, or a muzzle on my mouth."
The New York Times reports that the United States trade deficit widened by a surprisingly large 11 percent in September, reflecting both a surge in energy imports after Hurricane Katrina and a steep drop in airplane exports because of a strike, the government reported yesterday. The trade gap with China also set a record.
The United States imported $66.1 billion more in goods and services than it exported in the month, breaking the record of $60.4 billion set in February, the Commerce Department reported.
The trade deficit in the first nine months of the year totaled $529.8 billion, about 18 percent higher than in the first nine months of 2004. That figure itself was up 21 percent over the period in 2003.
Economists had expected the trade deficit to widen to $61.5 billion in October, according to a survey by Bloomberg News. Some analysts said the gap would narrow in the coming months but others were not as sanguine, saying the deficit would have been wider even without the one-time effects seen in September.
"One-third of the widening of the deficit is the oil bill, and aircraft sales explains most of the rest," said Carl Weinberg, chief global economist at High Frequency Economics, a research firm.
After Hurricane Katrina hit New Orleans at the end of August, gasoline and natural gas prices surged and imports of the products increased to make up for lost domestic production. Natural gas imports climbed 30 percent, to $3.7 billion, and petroleum products and fuel oil jumped 22.8 percent, to $6.8 billion. (Crude oil imports, however, fell by $350 million, reflecting the shutdown of oil import terminals and refineries on the Gulf Coast.)
At the same, exports fell by $2.8 billion, mostly because of the drop in airplane sales. The Boeing Company said a strike by machinists in September delayed the delivery of 30 planes. Food exports fell $296 million, reflecting transportation disruptions caused by the shutdown of the Port of New Orleans.
Mr. Weinberg said he expected the trade deficit to narrow as aircraft sales pick up - Boeing projects an 11.7 percent increase in sales in 2006 - and energy prices retreat. The Labor Department reported yesterday that the price of petroleum-based imports fell 4.4 percent in October after surging 8 percent in September. Prices of all imports dropped 0.3 percent, only the second decline this year, after rising 2.3 percent in September. Excluding petroleum products, import prices rose 0.8 percent in October.
But other economists say the trade deficit will remain at today's levels, or could deepen, because domestic demand for foreign products remains strong and the dollar has strengthened against the euro and Japanese yen this year, making American exports more expensive in other countries
"Only with very weak U.S. growth or a major drop in the U.S. dollar will the trade deficit improve on a sustained basis," said Ethan Harris, chief United States economist for Lehman Brothers. "The reason you need these dramatic movements is that the U.S. has, according to almost every study, an incredible appetite for imports."
The trade deficit with China, the largest with any single country, rose 8.8 percent, to $20.1 billion in September and was up 28 percent, to $146.3 billion, for the first nine months of the year. Exports to China fell 17 percent and imports rose 4 percent in September.
This week, American and Chinese government officials reached a deal to restrict the growth in textile imports from China for the next three years. The Bush administration and Congress are also pressing China to allow its currency, the yuan, to appreciate much more against the dollar. Democratic, and even some Republican, lawmakers have threatened to impose sanctions on the country.
President Bush plans to visit Beijing late next week, and the growing trade deficit with China is expected to be at the top of his agenda.
Economists note that the United States has an increasingly complex relationship with China, in part because it is the largest holder of federal government debt.
"If the Chinese abandon our Treasury market, we would see an enormous jump in interest rates," Mr. Harris said, "and, of course, if we stop buying their products their economy is going to go into recession."
The Chinese government reported yesterday that its October trade surplus with the rest of the world jumped to a record $12 billion in October. It had a total trade surplus of $80.4 billion for the first 10 months of the year, 2.5 times the figure for the period last year.
In other economic news, the Labor Department reported yesterday that claims for unemployment benefits rose about 2,000, to 326,000 last week. Claims were down by about 5,000 from the comparable week last year.
The University of Michigan said yesterday that its consumer confidence index edged up to 79.9 this month from 76.5 in October, its first increase in three months.
The NYT says that the newest award in broadcasting excellence gives new meaning to the line Gloria Swanson made famous in "Sunset Boulevard": "I am big. It's the pictures that got small."
The National Academy of Television Arts and Sciences, best known for handing out the Daytime Emmy Awards, is expected to announce on Tuesday that it has created an award category to recognize original video content for computers, cellphones and other hand-held devices, like the video iPod and PlayStation Portable.
The category is to have its debut at the academy's next Sports Emmys presentation, and ultimately be added as a category for other Emmy presentations as well, including those for news and documentary, business and financial reporting and daytime television. The category will not be included in the prime-time Emmy Awards, which are overseen by a sister organization.
The academy already hands out a technical achievement award for new media. But this will be the first time the group has recognized original content for cellphones and other devices, which have gained some acceptance among media-hungry consumers.
Already several studios are experimenting with creating serials for mobile phones, many derived from programs already shown on television. The academy hopes the new category will draw attention to a rapidly growing business that is expected to expand even more as consumers, largely teenagers, adopt new technology quickly.
"Television is transforming into moving images anytime, anywhere," said Peter Price, president of the academy.
The academy awarded 136 Emmys last year, a number that does not include prime-time Emmys. The list already includes plenty of obscure awards, like best sports "studio host," "play-by-play," "studio analyst" and "sports event analyst." There's also a sports Emmy for "outstanding live event turnaround."
While the medium is new, it has attracted interesting players.
Apple recently announced that Pixar Animation Studios would create six short animated films that would have their debuts on Apple's new video iPod. The News Corporation created the serial "24: Conspiracy" for cellphones, based on a 20th Century Fox Television show. In February, MTV Networks, a division of Viacom, is to introduce "Samurai Love God," an animated series.
And Warner Brothers, a Time Warner unit, hopes to distribute an animated short series for cellphones based on the comic books created by Seth Cohen, the aspiring comic book writer played by the actor Adam Brody on the hit show "The O.C."
Despite the academy's interest, the market for such programming is still tiny. "It is not yet a mass market phenomenon," said Linda Barrabee, a senior analyst for wireless mobile communications at the Yankee Group, a research firm in Boston. Still, she added, "at some point we will have widespread adoption; this makes sense to me."
Ms. Barrabee has estimated there are 500,000 mobile video viewers in the United States, a fraction of the 193.6 million mobile phone subscribers. To watch video now, consumers must own a phone with video ability (they are widely available in Europe and Asia) and pay a service fee to receive broadcasts.
Mr. Price said the academy would announce the new category Tuesday when his group will announce it is accepting nominations for the 27th Annual Sports Emmy Awards, which will be given out on May 1, 2006. He said he planned to discuss the new category with sports programming executives at a meeting on Monday.
Entries cannot be from television shows that have already been shown. Potential submissions include video blogs, web programs, event coverage, mobile phone serials and other video-on-demand content. They cannot exceed 20 minutes.
The academy is following in the footsteps of film festival organizers in giving out new-media film awards. Most recently, the cellphone maker Motorola sponsored a mobile movie category at the Toronto International Film Festival.
Mr. Price said the academy came up with the idea for the new category when its awards committee met in early October. Committee members had noticed reports suggesting that consumers were getting more entertainment from cellphones and hand-held devices. "It became apparent this was going to bust open," Mr. Price said.
"Av said, 'I can see this happening in the news business,' " Mr. Price said, referring to Av Westin, a member of the awards committee.
Mr. Westin, a former executive producer of "ABC Evening News," said it would take some time for the committee to evaluate new entrants. "We are not going to reward 'Lost' or 'Desperate Housewives,' " said Mr. Westin, noting those programs are reruns from television. "What we are trying to do is get our arms around the next generation and take the leading role here."
