EU ministers push for tax
Europe’s finance ministers yesterday made another effort to achieve a breakthrough on a disputed financial transactions tax, as Germany unveiled a plan to bring on board a skeptical Britain. Ministers entering the second of a two-day meeting here expressed cautious support for a proposal issued by German Finance Minister Wolfgang Schaeuble to introduce a tax only on trade in company shares before broadening it out. Acknowledging that resistance from several countries had delayed the tax, proposed by the European Commission in September last year, that aims to make the financial sector pay for the crisis, Schaeuble proposed an “intermediate step.”
US has highest corporate tax
The US will hold the dubious distinction starting today of having the developed world’s highest corporate tax rate after Japan’s drops to 38.01 percent, setting the stage for much political posturing, but probably little tax reform. Japan and the US have been tied for the top combined, statutory corporate tax rate, with levies of 39.5 percent and 39.2 percent respectively. These rates include central government, regional and local taxes. Japan’s reduction, prompted by years of pressure from Japanese politicians hoping to spur economic growth, will give that country the world’s second-highest rate. This has triggered complaints from US politicians and business groups. The average corporate tax rate this year for the 34 developed countries is 25.4 percent, according to the Organisation for Economic Co-operation and Development.
Chinese timberland company Sino-Forest Corp (嘉漢林業), which is being investigated for fraud, said on Friday it is filing for bankruptcy protection, putting itself up for sale and filing a lawsuit against the research firm that accused the company of exaggerating its timber holdings. Sino-Forest said it will implement a restructuring plan if the company doesn’t receive a suitable takeover offer. The request to the Ontario Superior Court is the equivalent of a US Chapter 11 filing. Sino-Forest was once Canada’s most valuable publicly traded forestry business, but shares plunged last year after short-seller Muddy Waters Research alleged that the company exaggerated its assets. Securities regulators in Canada suspended trading in the shares on the Toronto Stock Exchange. The company is under investigation by Canada’s national police force. Sino-Forest’s shareholders in Canada and the US have also sued, alleging fraud at the company.
Consumer confidence up
Consumer spending increased by the most in seven months in February as households shook off a rise in gasoline prices, leading economists to raise forecasts for first-quarter growth. Even with gasoline around US$1.05 per liter, Americans were more optimistic about the economy’s prospects this month than at any other time over the past year, drawing solace from a firming labor market. The Commerce Department said on Friday that consumer spending rose 0.8 percent in February as demand for long-lasting goods, like automobiles, rose sharply. It also said spending in January was double the previously reported 0.2 percent gain. Separately, the Thomson Reuters/University of Michigan’s final reading for the overall consumer sentiment index last month rose to 76.2, the highest level since February last year, from 75.3 in February.