Today in the pressMonday 13 January 2014 09.27
SLASH TAX TO CREATE JOBS AND ATTRACT BUSINESS, REPORT URGES - Income tax should be dramatically slashed to encourage risk-taking in business and bring in foreign start-up companies, the Government is being advised. A radical report by an expert group on entrepreneurship, seen by the Irish Independent, has recommended a flat tax on all income of 15-20% in a long-term strategy to attract corporations, immigrant business people and keep wealthy Irish in the country. The low flat rate of tax would be on all income and would also be aimed at eliminating evasion. "High income tax rates results in fewer jobs, results in more people on social welfare, and results in a dying economy," the report by the Entrepreneurship Forum says. Chaired by entrepreneur and venture capitalist Sean O'Sullivan, the forum makes 69 recommendations about improving the number of jobs created by entrepreneurs in the country, including: capping USC at €100,000 for self-employed just as it is for employees, let women share maternity leave with partners, tax breaks for company-to-company lending to bypass banks, tight rules on banks using personal guarantees in lending, remove any barriers to bringing in international banks to fill the gaps in Irish business lending, attract foreign direct investment from start-ups, rather than just established multinationals, make Ireland the European trade hub for China and speed up grants for people coming off the dole to start up their own company.
NOONAN TO SEEK MEPs’ SUPPORT FOR DEBT RELIEF OVER BANKS - Minister for Finance Michael Noonan is expected to enlist the support of the European Parliament for Ireland’s campaign for debt relief on its legacy banking debts, when he meets senior MEPs in Dublin this week. A delegation from the Parliament’s economic and monetary affairs committee (ECON) , which includes Irish MEP Gay Mitchell, arrive in Dublin on Thursday as part of their ongoing inquiry into the workings of the troika, says the Irish Times. The committee, which announced the probe late last year amid concerns about the democratic accountability of the troika system, will hold meetings with the Minister for Finance and Minister for Public Expenditure Brendan Howlin, Central Bank governor Patrick Honohan, IBEC and the ICTU. In a letter sent by the Minister for Finance to committee chair Sharon Bowles in response to a series of written questions from the Committee and seen by The Irish Times, Minister Noonan states several times that the option of involving senior bondholders in the resolution of Irish banks was prevented by the troika. Ireland would continue to explore ways of reducing its legacy bank debt, he says.
BANK PROBES CARD INSURANCE SALES - The Central Bank is investigating the sale of credit card identity insurance following an agreement to pay over €1 billion in compensation to customers in Britain, says the Irish Examiner. Last week UK-based insurer CPP agreed to compensate seven million people who were mis-sold insurance alongside credit and debit cards. The company has approved a compensation package worth £1.3 billion (€1.5 billion) - an average payment of £200 per customer who was mis-sold CPP identity insurance. In Ireland both Ulster Bank and Bank of Ireland sold the CPP products in question to Irish customers. A spokesperson for Ulster Bank confirmed that they had sold the product in question here. “The CPP product was previously sold to Ulster Bank customers. “We have provided information regarding this product to the Central Bank at their request,” a spokesperson said. Bank of Ireland sold the products in both Ireland and England but was not named in the UK financial watchdog’s review of the product. The Central Bank refused to comment on any investigation into the sale of the products in Ireland.
BANKS WIN BASEL CONCESSIONS ON DEBT RULES - Global regulators have watered down controversial new rules aimed at reining in banks’ reliance on debt, following ferocious industry lobbying. Central bankers and supervisors on Sunday approved an international standard for the leverage ratio - a measure of financial strength that is considered less susceptible to being gamed by bankers - that offers some concessions to banks. The changes announced in Basel, Switzerland, will come as a relief to big investment banks who had been fretting they would be forced to raise billions in extra capital, writes the Financial Times. The modifications ease the requirements for products, such as derivatives and repurchase agreements, which make up large parts of their balance sheets. Daniel Davies, an analyst at Exane BNP Paribas, said the result was “more of a win for the industry than I was expecting”. A regulatory source said the effect of the adjustments could be to raise big global banks’ average leverage ratio from about 3.8% to just over 4%. The standard, a crucial part of the Basel III banking reform package, does not kick in until 2018, and regulators have not yet set the minimum required ratio. Basel has proposed a 3% minimum, but some national regulators, including the US, want to go further.