tax avoidance

While nation states and workers burn, the banks get a trillion euros

Belgian unions have criticised a fresh round of austerity measures announced over the weekend by the federal government as a missed opportunity for ‘tax justice’.

The government already plans as part of a €11.3 billion cuts package  agreed when the current administration took office at the end of 2011 to increase the retirement age from 59, balance its public sector budget by 2015 and raise an array of taxes.

Now it is planning to raise more taxes and postpone €1.82 billion of spending commitments, including on welfare, the promotion of generic medicines and foreign aid.

The coalition government plans to reduce its public sector deficit to 2.8% of GDP in 2012, from its 2011 level of 3.8% in order to meet EU demands for deficit reduction. If it fails to cut its deficit to a level of a maximum of 3%, it could face EU fines.

To justify more austerity, the government has opted to use the central bank’s forecast of a 0.1% contraction in the economy this year, instead of the more optimistic 0.1% growth predicted by the Federal Plan Bureau, which generally provides the estimates used in drafting budgets.

In 2011, Belgium’s economy, the sixth largest in the eurozone, grew 1.9%. A contraction would require greater savings than those already planned.

The FGTB trade union central, which led the first general strike in almost two decades on January 30, said that the measures had omitted any funding to turn the economy around, and contained no ‘significant’ initiatives to make the tax system fairer, something that could be achieved through a crackdown on tax avoidance, a wealth tax and a register of the rich. Promised funds for parental leave are now going to be withheld, it added.

The FGTB did, however, welcome a retreat from plans to axe automatic indexation of wages: ‘The government has listened to the demand of the unions, and the FTGB, not to touch  purchasing power.’  The FTGB also welcomed a temporary freeze on energy prices and a tax on the stock exchange, which it described, however, as ‘insufficient’

‘We fear the debate has been limited to competitiveness..and wage costs. We need a genuine growth plan that maintains and creates quality jobs and contributes, together with [Belgium's] regional governments, towards building an economy that is more innovative and sustainable.’

The FTGB also called for action at a European level against austerity policies imposed on EU member states.

In its statement the FGTB ended with a question: ‘While nation states and workers burn, the banks get a trillion euros at 1% from the European Central Bank. Why?’

Belgium: Against blind Austerity, For an Alternative

Ahead of Belgium’s general strike on Monday, here’s some alternative ideas to austerity, courtesey of the main trade union confederation, FGTB

Belgium is bracing for a general strike on Monday. It will be led by Belgium’s FGTB trade union confederation.

“The financial crisis and the banking rescue have hurt the public finances. The credit rating agencies and the financial markets have taken power and are undermining democratic decision-making,” says the FGTB, which has over a million members in a country of around 10 million.

“The European Council and the European Commission (majority liberal and christian democrats) don’t have any valid proposals and in the absence of anything better are imposing generalised austerity on member states, including Belgium.”

The Belgian government ”has no sustainable plan to revive the economy,” the FGTB adds. The Government’s plan, which includes raising the retirement age, cuts to unemployment benefit and essential public services like health as part of a Euros 11.3 billion cuts package, is “unbalanced” .

The FGTB says the austerity plan ”makes workers and welfare recipients pay for the deficit instead of those who are responsible for the crisis.”

“Let’s mobilise on 30 January for alternatives and durable solutions and against blind austerity,” it says.

There is an alternative to the austerity policies pursued by its government and encouraged by the EU, ECB and IMF. Here’s what the FGTB proposes:

• A plan for growth to provide quality, sustainable jobs: Euros 15 billion public investment in businesses, tied to the creation of jobs and investment in innovation and the real economy
• A reversal of anti-social measures with respect to pensions, early retirement and unemployment benefits 
• The protection of purchasing power and welfare payments, through indexation and price controls, through guarantees for access to essential, quality services like health, and through a properly financed social security fund
• Tax reforms to make the rich and and capital pay more: a better distribution of wealth can help fund public services and quality jobs. The FGTB’s proposed tax reforms imply an end to banking secrecy, a clamp down on legal avoidance and reintroduction of previously withdrawn/reduced taxes on companies and high incomes, it says
• End to the poor financing of, and incessant attacks on public services, which are the real distributors of wealth
• Create a genuine social Europe: The EU must stop “generalised” austerity that hurts economies, public services and welfare states; it must guarantee sustainable growth and assist member states in promoting policies that protect all citizens, regulate financial markets, harmonise corporate taxes. It must assist an exit from the current crisis through the issuing of Eurobonds, the imposition of a tax on financial transations (Robin Hood Tax) and guaranteeing a role for the European Central Banks of ‘lender of last resort.’

www.fgtb.be

Portugal’s general strike. Why workers are back on the streets again

Portugal’s premier Passos Coelho was elected in June promising that deep and rapid spending cuts would turn things around for Portugal. The chances of him delivering were slim. The people had chucked out the Socialists because they had promised the same miraculous recovery through the same austere economic medicine, and failed to cure the ailing patient. The EU/IMF bailout package that Coelho and his right-wing coalition government swallowed hook and line five months back dictated economically suicidal deficit reduction targets, and as has been the case in Greece, Portugal is now in a bigger mess than ever.

Coelho’s promises of an export surge have evaporated along with growth across Europe. Spending in the local economy – internal demand – has collapsed. This is expected to shrink the economy by 1.9 percent this year and at 3 percent in 2012, in what is likely to be Portugal’s worst recession since the 1974 ‘Carnation’ revolution, according to forecasts. This in turn means Portugal has been missing deficit reduction targets – as tax receipts fall and because of simple statistics – the targets are expressed as a ratio of economic growth.

Europe’s capitalist banking crisis and the policy responses are hitting its weakest economies hardest and within them the weakest members of society.

In Portugal, one the poorest EU states, unemployment stands at 12.4 percent, or around 700,000, the highest level since the 1980s. And these official figures underestimate the scale of the social crisis, according to the CGTP trade union confederation. Once you include the army of “underemployed”, the precarious workforce, largely made up of women and young people who are working part-time involuntarily, on short term or zero hours contracts, or highly qualified/skilled people in low-paid jobs, you are talking about 1m people, or about 18% of the working age population surviving on little or nothing.

Add to this cuts to wages, welfare and public services, increases in working hours, plus hikes in VAT, and it is not surprising that the Portuguese people are deeply unsatisfied.

Especially as they see large companies and banks who raked it in during the good times, on the back of tax giveaways, huge state subsidies (after the 2008 global financial meltdown) and cheap credit from the European Central Bank getting off lightly. Portuguese families – now deeply indebted thanks to a squeeze on incomes caused by wage restraint and a rising costs of living and facilitated by reckless but highly profitable lending by banks – are being expected to pay 10 times more towards the bill to cut the national deficit than corporations.

An opinion poll at the last month showed most Portuguese do not trust the centre-right government and do not believe it will meet the deficit targets. As many as 81 percent disagreed with the draconian draft 2012 budget, which detailed the extortionate demands of the 78 billion euro EU/IMF ‘bailout’ package.

Anger and disillusionment has been pouring into the streets with protests kicking off almost every week since the start of the fall. On October 1, rallies against the austerity measures called by the CGTP saw 130,000 marching in Lisbon and another 60,000 in Porto, the country’s second largest city, and there were mass protests across the country on October 20. On November 12, civil servants and soldiers staged an anti-austerity protest in Lisbon with marchers shouting and carrying banners reading, “No to stealing wages”, “Yes to work, no to joblessness”.

Tomorrow (Thursday 24 November), Portugal’s trade unions will stage a general strike to say no to the unfair and unnecessary pain. It will be the second general strike held over the past year jointly by the historically divided trade union confederations.

The message will be that there is an alternative to the self-defeating austerity measures: policies for growth financed by a fairer and more effective tax system where the rich and corporations pay more and there’s zero tolerance for their tax dodging; a boost to public investment, wages, pensions, which will help lift the local economy and underpin strategies to repair the country’s damaged industrial fabric; and finally, a much slower and less steep deficit reduction plan.

Today (Wednesday 23 November) the unions said the strike was a “serious warning” to the Government, with CGTP leader Carvalho da Silva criticising the Government for “impoverishing” the country and “unscrupulous employers” for taking advantage of the economic crisis to “increase the exploitation” of their workforces.

Both confederations also reject the planned privatisations that include the national airline TAP, airport managing company ANA, the freight transport branch of the railways CP, and the postal service CTT, as well as stakes in the power and electricity companies EDP and REN.

PM Coelho is looking increasingly desperate. He was in his native Angola last week. Not for pleasure, but to seek urgent investment from the booming oil-rich former colony into the collapsing economy on the Atlantic fringe of a crisis-ridden Europe.

But Angola won’t bail out Portugal, any more than China will rescue out Italy.

A real alternative to the failed neo-liberal medicine prescribed by the IMF and EU institutions and dished out by current and past Portuguese governments is needed.

An alternative that, like the Portuguese unions’ strategy, seeks to put the needs of ordinary people, rather than bankers, first.

Portugal’s General Strike November 24 – what the CGTP trade union confederation says:

This general strike is for economic growth, jobs with rights, boost to the productive sector, increase in wages and pensions and stronger protection and welfare.

This General Strike is for the renegotiation of the debt, against the programme of aggression against workers, people and the country.

Key Points:

• The country is faced with an austerity programme without parallel since or on April 25 [Portugal’s Carnation Revolution]

• We are facing an economic recession, an increase in the exploitation of workers and the impoverishment of the country.

• The culprits for this situation are the international Troika [ECB-EU-IMF] and the policies of the government of the PSD/CDS

• The claims that these policies are inevitable are false.

• What is inevitable is the resistance and persistent struggles of the workers and the Portuguese people against these policies.

The CGTP rejects

• The increase in working time by 2.5 hours to 42.5 hours a week because it will cause unemployment, cut salaries and subvert collective bargaining

• The 50% reduction in overtime rates and “hour banks” because it will results in a 30% cut in income

• A cut in holidays as it will transfer income from workers to the pockets of large shareholders and bosses

• Changes to make it easier and cheaper to fire workers, cuts to unemployment benefits and other welfare payments

• A brutal increase in process of essential goods and services like electricity, gas transport, medicines and the unmeasured and unsustainable increase in the cost of living

• Privatisations in particular transport companies that will increase prices, reduce services, attack workers rights and cause more unemployment

• So-called reforms of the local and central public administration that will lead to a qualitative and quantitative reduction in services and destroy thousands of jobs

Employment – Wages – Rights – Public Services

This is the politics of scorched earth. We must defend the interests of our country, of workers and the people, guaranteeing a future and [economic] development and not the interests of moneylenders and usurers. These are policies applied to Greece with the result that we are all aware of. The “holes” in the public accounts with which they are attempting to “assault” the pockets of the workers are not the workers fault and much less that of the struggles they have led.

It is the policies followed by successive governments that have destroyed Portugal’s productive capacity; the public-private partnerships that consumed tens of billions of euros to the advantage of the few; the thieves of public money like the “deals” by BPN or BPP [banks] that will be paid for by the Portuguese people; collusion [between business and politics] and corruption; the tax fraud and evasion and the black economy.

We are face with unacceptable attacks on workers in the private and public sector, and a brutal attack on democracy, on guaranteed constitutional rights and an attempt at subverting the democratic political system.

Portugal will not impoverish and ruin itself, not will it subordinate itself to the interests of foreign capital and Europe’s big powers.

For all these reasons for the violent attack on the dignity of working people and those who dedicate themselves to the country for the aggression against the legitimate aspirations of the young, let’s all join the general strike!

More information (in Portuguese) at

http://grevegeral.net/index.php/diario-da-greve-geral

Tax the rich, says Italian trade union

CGIL, Italy’s largest trade union confederation, has called on the country’s new prime minister Mario Monti to introduce a wealth tax.

The tax would hit only affect the top richest 5% in Italy, with assets of 800,000 euros or more, and raise 18 billion euros (£15.4 billion) annually for the Treasury.

Taking a similar French tax as a model, it would be set at an average of 1%.

The calculations by the confederation’s own economics experts use the Bank of Italy’s definition of “net wealth” which is defined as the sum of “real activities” (properties, company holdings and objects of value) and “financial activities” (property, deposits, bonds, shares) minus mortgages and other debts.

In addition to raising badly needed funds for the Treasury, the tax address gross inequalities of wealth, says the CGIL. 

According to the CGIL, Bank of Italy figures show that

• the richest 10% of families account for 45% of the total net wealth, while
• the poorest 50% of has just 10% of the wealth
• 2.4 million families have on average 1.6 million euros worth of property and financial assets, but
• 12 million families have less than 70,000 euros
• The richest 5% of families have 2.3 million euros in assets on average.  
• The richest 1% have 5.3 million euros in assets on average

The figures do not reflect the extraordinary amount of wealth held by the very rich who, like recently deposed prime minister Silvio Berlusconi, legally and illegally hide much of their assets from the tax collectors, thanks to a large degree by the existence of tax havens.

The proposed wealth tax, part of a long campaign by the CGIL for tax justice, would require a “minimum contribution” from the super rich to improve the country’s finances and funding for growth and essential services, says the CGIL.

Up to now, the middle and working classes have born the burden of increased taxes, which together with welfare changes, rising unemployment, real cuts in income through imposed wage restraint and persistent high inflation, have hit high street spending, sending the country into a recessionary tail-spin. 

Bar billionaire Silvio Berlusconi’s People of Freedom party, most other political parties says they support some sort of wealth tax in principle.

Berlusconi resigned at the weekend, but with a “technocratic” government in the final stages of being formed it is unclear what influence any elected politicians will have on Italy’s economic and social policies.

More info at www.cgil.it

Italy: Here’s where all the money went

Italy is broke we are told.

Well there are reasons for this.

This is not an exhaustive list.

Euros 120 billion (£102 billion) – tax evasion

Euros 60 billion – corruption

Euros 230 billion – foregone tax revenues from capital sitting in tax havens*

Euros 45 billion – cost of injuries at work in social insurance and health bills

Euros 25 billion – costs associated with illegal construction and environmental damage

*Italian corporations and the rich have some Euros 500 billion stashed away in Switzerland, the Cayman Islands and other paradisi fiscali. In 2009, the government of billionaire Silvio Berlusconi in 2009 introduced a tax amnesty, or scudo fiscale, on this capital, which allowed them to pay a mere 5,000 euros in tax per 100,000 euros repatriated. Euros 100 billion came back. The country got a mere Euros 5 billion. Half of Italy’s largest companies, and now many of the smaller ones, and the biggest banks are based in tax havens.

Total debt mountain: Euros 1,900 billion

If the Italian government stopped allowing the business class and the rich to rob the state blind it clearly wouldn’t take long to cut that down to size.

And perhaps invest a bit in a future for 22 million jobless, tackle low pay, poverty pensions, a creaking education system…

 Figures sourced from Soldi Rubati (stolen money), Nunzia Penelope, July 2011

Berlusconi and Italy’s ‘financial coup’

By Tom Gill

Italian premier Silvio Berlusconi sees conspiracies everywhere.

The ‘Communists’ –  not the real ones as these are thin on the ground these days - can be found in parliament, in the international press, and above all in the judiciary. The ‘Red Magistrates’ are hounding him in court cases over corruption, tax fraud, abuse of power and paying for sex with a minor.

This week, he put his finger on a new, much more real, conspiracy.

Rome has been under growing pressure for the size of Italy’s public debt – more than 1.9 trillion euros (£1.6 billion) or 120 percent of gross domestic product, making it the second largest in the region after Greece - and the billionaire media magnate’s inability to reassure international investors hoIding Italian treasury bonds that he can actually reduce it.

Measures taken since the summer to shore up the country’s finances have relied almost exclusively on spending cuts and taxes on the working and middles classes who keep main street in business. Growth, which could make a major contribution to cutting the deficit, remains anemic.

The thing about Italy, Europe’s fourth largest economy is that unlike Greece, it is too big to fail. And that’s really scaring other European governments and the institutions like the IMF, European Central Bank and European Commission that might be called upon to bail it out. This week’s downgrade ( three levels to A2 from Aa2) by credit agency Moody’s, which warned that further downgrades of Italy were possible, and the rapidly unfolding meltdown of the global (but especially European) banking system is adding to ‘investor’ worries.

Berlusconi, once highly favoured for keeping the left out of power and his promises of injecting dynamism in the Italian economy, is now considered very much part of Italy’s “international credibility” problem. One leading Italian economist, Tito Boeri, has calculated that since this summer his disastrous premiership has cost the country Euros 20 billion.

Berlusconi’s former allies in the business world, from Emma Marcegalia, the president of Confindustria (the Italian CBI), to Sergio Marchionne, the CEO of Fiat, have deserted him. So too the conservative press (the bit that he doesn’t already own). “We are neither credible nor serious. Nobody invests in Italy anymore. And who lends to us wants usurious rates,” said Ferruccio di Bertoli, editor of Corriere della Sera, in a front page commentary of Wednesday.

But most seriously for Berlusconi is the collapsing support within  own political party, including his Finance Minister Giulio Tremonti, who suggested days ago that it was a time for a new government. “The time has come for a hand-over,” added Santo Versace, an MP who quit Berlusconi People Freedom party last week.

A hand-over won’t come through elections, though, as these may result in Italians choosing to deal with their sovereign debt crisis in un predictable ways, like conduct a debt audit to decide what part of the debt is legitimate, or recover hundreds of billions of euros stolen every year from the Italian state by cracking down on corruption, organised crime, tax evasion, avoidance and other legal forms of financial treason.

Instead, just as in the 1990s when the Italian people were made to pay down debts they didn’t create to prepare for entry into Europe’s Single Currency, the plan is to put in place a ‘technocratic’ government, possibly headed by former European Commissioner Mario Monte.

To restore the nation’s finances, Monte and other faceless technocrats could then implement more drastic welfare and public spending cuts and “structural reforms”, including opening up new areas of public activity to profit, and cuts to pensions and employment rights, ensuring that, as the unions have been saying, the “same old people” pay the bill.

These plans to curtail Italian sovereignty and democracy come after the ECB ordered in August the Italian government to implement “a comprehensive, far-reaching and credible reform strategy,” a strategy that was spelled out in some detail by the Frankfurt-based central bank governor. The enforced measures were in return for the ECB purchasing Italian government bonds (debt).

Many Italian MPs, a high number of which are former businessmen with continuing strong links to the international corporate world, will swing behind this technocratic administration, including the opposition centre-left ‘Democrats’.

The plan, says Berlusconi in his usual conspiratorial tone, is a ‘financial coup’. And although I don’t believe in conspiracies, or much said by Italy’s PM, he’s absolutely right on this one.

Portugal: contra o programa de agressão!

Against impoverishment and injustice, against the programme of aggression! For jobs, wages, pensions and social rights! These are the slogans that will accompany tens of thousands expected on a march in Lisbon and Oporto today to protest against IMF imposed austerity and privatisation programme.

The demonstrations, called by the CGTP, the country’s largest trade union central, come amid rising speculation that Portugal will follow Greece in defaulting on its debts. The government of Pedro Passos Coelho is at pains to argue it is not another Greek tragedy waiting to happen but he’s short on the evidence for this.

This year’s public deficit is falling short of targets, it was confirmed this week, and previous years figures have been revised upwards to incorporate hidden debts, built up in the islands of Madeira. Furthermore, last Saturday the premier had to admit that the Portuguese economy could contract by 1.8% of gross domestic product in 2011 and a more than anticipated 2.3% next year .

The CGTP is not surprised. Like the Left Bloc and Portuguese Communist Party (PCP), the union has repeatedly warned that austerity measures will undermine growth and the public finances.

Portugal, in line with terms agreed for the €78 billion ‘rescue’ loan from the IMF/EU agreed last May, has already passed a wave of measures including a hike in transport prices, increased taxes on gas and electricity and cutbacks in the public work force. Last month, Portugal unveiled plans for a slimmed-down central administration with the axing of 27% or 1,700 managerial posts from the state administration and 137 public companies of directors’ posts.

On Thursday it gave the formal go-ahead for the sale of its Euros 2.3 billion (£2 billion) stakes in power utility EDP, the country’s largest company and pioneer in wind power, and power grid operator REN, which it wants to complete by the year end. In the running to sweep up are German and French energy multinationals EON and Suez, plus the Chinese Power International and Brazil’s Eletrobras.

In a veritable sale of the century, the Portuguese government has also promised to sell its remaining 7 percent stake in oil company Galp this year, as well as privatise TAP air carrier, the national airport service ANA, postal service CTT, water company Aguas de Portugal and RTP public television.

Meanwhile the country’s flagging banks, which have lost 46% of their stock market value since the beginning of the year, are going cap in hand to foreign investors too, including the Chinese. Portuguese banks have struggled to borrow money after the country’s sovereign debt crisis broke out last year. They are under now pressure from the Bank of Portugal to get their financial houses in order, which means no lending to the real economy.

The European Commission is doing its best to maintain positive mood music on Portugal, asserting that it will not need a second financial rescue package. But it also concedes that this may change depending on the Greek situation. “What happens in Greece will impact all over the place, in Portugal, Germany…”, said an EC spokesman Amadeu Altajaf,  this week, noting that “countries under greater pressure will suffer more”. The current foreign aid programme for Portugal is “sufficiently well financed”, he said, but acknowledged the situation was at the mercy of “events beyond Portugal’s control”.

Times are certainly getting desperate, with a historic jobless rate of over 12%, rising poverty and accelerating home repossessions – up 350% since the start of the financial crisis in December 2007.

But the thousands who will turn out today in the streets of the Portuguese capital will be in no mood to surrender to the mad money men and their guardians in the capitals of Europe and the US.

The fact is alternatives do exist.

The CGTP argues, for example, that a proper campaign against fraud, tax evasion and the black economy – worth  £30 billion a year -  could swiftly deal with the deficit, provide funds for growth and obviate any need to sell off the country’s industry and public services to the highest bidder.

More taxes on the rich in a country where the top 25 families hold more £17.4 billion, or 10% of the country’s wealth, would help too, as could a Robin Hood style tax on speculative stock market movements that have done so much damage to the Portuguese economy.

The provision of decent wages, pensions, and levels of welfare, which stand among the lowest in the EU, would not only be just, but would provide a much needed boost to growth.

Finally, the CGTP and other opponents like Left Bloc and the PCP of the government’s policies argue that the country’s public debt – which grew sharply on the back of multi-billion pound handouts to local banks, reckless lending by foreign banks, and speculators on international markets betting against the country’s financial woes – should be renegotiated.

That’s an alternative many protesting today feel is worth fighting for.