Essential tax and accounting reading: GOP budget detailed, EU transfer tax fading, Australia taxes mining, UK and Switzerland settle, and more
Welcome to the top tax and accounting headlines from Reuters and other sources.
* Republican budget draws election contrast with Obama. David Lawder – Reuters. Paul Ryan’s proposed budget plan would shrink deficits to $3.13 trillion over 10 years – less than half the size of the deficit projected under President Barack Obama’s plan. It would dismantle Obama’s 2010 healthcare reform law and make deep cuts to federal employee pensions and to social programs such as food stamps and the Medicaid healthcare program for the poor. The Ryan plan proposes to grind down public debt as a share of economic output to 63.5 percent by 2021, compared with 76.3 percent under Obama’s plan. It was 67.7 percent at the end of 2011. Link
* UK budget to juggle politics of austerity. Matt Falloon – Reuters. British finance minister George Osborne looks set to divert attention from the country’s limp economy with politically driven tax measures in Wednesday’s budget, aiming to appease both parties in the ruling coalition and keep financial markets onside. He may remove a 50 percent income tax band for the highest earners. The Conservatives say that high a levy is a barrier to aspiration, while the Labour opposition say it is a fair way to spread the pain. To please the Liberal Democrats, the junior coalition partner, Osborne is expected to raise the income tax threshold by more than previously announced to 9,000 pounds ($14,300), which may please some low and middle earners. Link
* Germany loses bid for tax. William Boston and Beat Preuschoff – The Wall Street Journal. Germany appears to have accepted defeat in its efforts to persuade other European countries to impose a kind of sales tax on financial transactions in the European Union or in the smaller euro zone, possibly putting up an obstacle to ratifying the permanent euro-zone bailout fund in parliament. The chances are very slim, German Finance Minister Wolfgang Schäuble told a gathering of conservative lawmakers on Tuesday, according to a person in the meeting. He also said that introducing the tax in the euro zone alone “would be no easier.” Germany and France have tried for months to persuade their European counterparts to introduce a tax on individual trades in stocks, bonds and other financial instruments. Link
* Mining tax clears, but Gillard on shaky ground. Matt Seigel – The New York Times. Prime Minister Julia Gillard celebrated on Tuesday the passage of a controversial tax on profits generated by Australia’s enormous mining boom, a much needed legislative victory for the embattled leader, who recently survived an embarrassing leadership challenge from within her own Labor Party. The tax is expected to affect about 30 large mining companies, including top-tier global miners like BHP Billiton, Rio Tinto and Xstrata, which were reported to have been consulted by the government during the writing of the bill and were not expected to challenge it in court. Link
* Revised deal reached on Swiss accounts. Vanessa Houlder – The Financial Times. Switzerland and Britain have revised the landmark tax deal under which the UK aims to collect billions of pounds from secret Swiss bank accounts after the European Commission warned that it breached EU rules. Officials signed a protocol in Brussels that will modify the deal so it is compatible with existing EU laws on evasion. The revised deal will also block an inheritance tax loophole so that 40 percent of an estate’s assets in Switzerland will be paid to Revenue & Customs on the death of their owner, unless the assets are disclosed to the Revenue. Link
* An option for taxpayers ‘struggling to make ends meet.’ Michelle Singletary – The Washington Post opinion. For the past several years, the Internal Revenue Service has offered some relief for people having problems paying their taxes. This tax season, the IRS has specifically targeted the unemployed and small-business owners for help through its Fresh Start initiative. Under Fresh Start, eligible individuals will have until Oct. 15 to pay their taxes and avoid the failure-to-pay penalty. To qualify, you have to have been unemployed at least 30 consecutive days in either 2011 or this year up to the April 17 tax filing deadline. Link