• 75 percent tax on ultrarich? French court throws out president's plan

     

    By The Associated Press

    PARIS -- Embattled French President Francois Hollande suffered a fresh setback Saturday when France's highest court threw out a plan to tax the ultrawealthy at a 75 percent rate, saying it was unfair.

    In a stinging rebuke to one of Socialist Hollande's flagship campaign promises, the constitutional council ruled Saturday that the way the highly contentious tax was designed was unconstitutional. It was intended to hit incomes over 1 million euros ($1.32 million).


    The largely symbolic measure would have only hit a tiny number of taxpayers and brought in an estimated 100 million to 300 million euros - an insignificant amount in the context of France's roughtly 85 billion euro deficit.

     

    Prime Minister Jean-Marc Ayrault was quick to respond, saying in a statement following the decision the government would resubmit the measure to take the court's concerns into account.

    The court's ruling took issue not with the size of the tax, but with the way it discriminated between households depending on how incomes were distributed among its members. A household with two earners each making under 1 million euros would be exempt from the tax, while one with one earner making 1.2 million euros would have to pay. 

     

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  • Corruption, tax evasion have cost developing world $6 trillion - report

    By Reuters

    WASHINGTON - Crime, corruption and tax evasion have cost the developing world nearly $6 trillion over the past decade, and illicit funds keep growing, led by China, a financial watchdog group said in a new report.

    China accounted for almost half of the $858.8 billion in dirty money that flowed into tax havens and Western banks in 2010, more than eight times the amounts for runners-up Malaysia and Mexico.

    Total illicit outflows increased by 11 percent from the prior year, Global Financial Integrity, a Washington-based group that campaigns for financial accountability, said in its latest report released on Monday.

    "Astronomical sums of dirty money continue to flow out of the developing world and into offshore tax havens and developed country banks," said Raymond Baker, director of GFI.

    Italy rocked by corruption, drug scandals

    "Developing countries are hemorrhaging more and more money at a time when rich and poor nations alike are struggling to spur economic growth. This report should be a wake-up call to world leaders that more must be done to address these harmful outflows," he said.

    All the countries in the top 10, which this year saw India, Nigeria, the Philippines and Nigeria join the ranks, face significant problems with corruption, and in most there are vast gaps between rich and poor citizens as well as internal security problems.

    More donors freeze aid to Uganda over corruption

    Leaders of the Group of 20 major economies increasingly are focusing on ways to crack down on money laundering, bank secrecy and tax loopholes to prevent funds stolen from public coffers or earned through criminal activity from depleting the budgets of developing countries.

    The sums are so huge that for every dollar in foreign direct aid, $10 leaves developing countries. 

    The report said the 10 countries with the highest measured illicit money outflows between 2001 and 2010 were, in order: China, Mexico, Malaysia, Saudi Arabia, Russia, Philippines, Nigeria, India, Indonesia, United Arab Emirates.

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    Copyright 2013 Thomson Reuters. Click for restrictions.

  • Israel vows to withhold $400M in tax revenues from Palestinians over statehood drive

    Murat Kaynak / Anadolu via EPA

    Turkish President Abdullah Gul (left) and Palestinian President Mahmoud Abbas (second left) review the honor guard during a welcoming ceremony in Ankara, Turkey, Tuesday.

    By Reuters

    JERUSALEM - Israel will withhold tax revenues from Palestinian President Mahmoud Abbas' administration until March at least in response to his statehood campaign at the United Nations, Israel's foreign minister said. 

    Under interim peace deals, Israel collects some $100 million a month in duties on behalf of the Palestinian Authority in the occupied West Bank -- money that is badly needed to pay public sector salaries. 

    "The Palestinians can forget about getting even one cent in the coming four months, and in four months' time we will decide how to proceed," Foreign Minister Avigdor Lieberman said in a speech Tuesday night. 

    Israel says Abbas violated previous peace accords by sidestepping stalled negotiations and securing a Palestinian status upgrade in the United Nations last month. 

    Debts for power, water
    Israel has already withheld the December transfer, saying the money would be used to start paying off $200 million the Palestinians owe the Israel Electric Corporation. 

    Lieberman, a hardliner in Prime Minister Benjamin Netanyahu's conservative coalition government, said the Palestinians also had another debt with the Israeli water authority that would have to be paid off. 

    "Israel is not prepared to accept unilateral steps by the Palestinian side, and anyone who thinks they will achieve concessions and gains this way is wrong," he said. 

    Palestinians had a major symbolic victory when the United Nations General Assembly voted overwhelmingly to recognize them, but the U.S. argued the new status could set back Palestinians in the path to peace. NBC's Andrea Mitchell reports.

    Hamas leader returns to Palestinian territories for first time since 1967

    Yasser Abed Rabbo, a senior Palestinian official, said earlier this month that Israel was guilty of "piracy and theft" by refusing to hand over the funds. 

    The European Union has also criticized Israel for not handing over the cash.


    "Contractual obligations ... regarding full, timely, predictable and transparent transfer of tax and custom revenues have to be respected," it said on Monday. 

    UN upgrades Palestinian status, bolstering statehood claim

    Israel has previously frozen payments to the Palestinian Authority during times of heightened security and diplomatic tensions, provoking strong international criticism, such as when the U.N. cultural body UNESCO granted the Palestinians full membership a year ago. 

    Abbas's U.N. victory was a diplomatic setback for the United States and Israel, which were joined by only seven other countries in voting against upgrading the Palestinians' observer status to "non-member state", like the Vatican, from "entity." 

    Hours after the U.N. vote, Israel said it would authorize 3,000 new settler homes in the West Bank and East Jerusalem and expedite planning work for thousands more in a geographically sensitive area close to Jerusalem. Critics say this plan would kill off Palestinian hopes of a viable state. 

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  • Many Cubans to pay taxes for first time in half a century

    Greg Kahn / Getty Images, file

    A street market sells necklaces and bracelets in Old Havana on November 12, 2012 in Havana, Cuba. Shops like this, until a year ago, were only found in the black market.

    By Reuters

    HAVANA -- Most Cubans have not paid taxes for half a century, but that will change under new regulations starting January 1.

    The landmark move will change the relations of Cubans with their government and are a signal that market-oriented reforms are here to stay.

    They were launched after President Raul Castro succeeded his brother, Fidel Castro, in 2008.


    The recently published code constitutes the first comprehensive taxation in Cuba since the 1959 revolution abolished just about all taxes.

    In the 1990s after the collapse of the Soviet Union, the country's main benefactor, the Cuban government imposed a few scattered taxes, but mostly preferred to maintain low wages so it could fund free social services.

    The government's free-market reforms introduced over the last two years are designed to encourage small businesses, private farming and individual initiative. There are also plans to pay state workers more.

    Under the new tax code, the state hopes to get its share of the proceeds.

    'Major step' toward 21st century
    The government also envisions replacing subsidies for all with targeted welfare, meaning that the largely tax-free life under a paternalistic government is on its way out.

    "This radically changes the state's relationship with the population and taxes become an irritating issue," said Domingo Amuchastegui, a former Cuban intelligence analyst who lives in Miami and writes often about Cuba.

    Slideshow: Return to Cuba

    Traveling to Cuba is now easier for Americans and Cuban exiles because the government has relaxed years of restrictions on who can visit.

    Launch slideshow

    A Western businessman who has worked in Cuba for almost two decades told Reuters the reforms would take time, but added, "this is of course a major step forward toward the 21st century and a modern state."

    The new code covers 19 taxes, including such things as inheritance, environment, sales, transportation and farm land, various license fees and three contributions, including social security.

    Cuba issue deals blow to US stature at 'Summit of the Americas'

    A sliding-scale income tax -- from 15 percent for annual earnings of more than 10,000 pesos (about $400) to 50 percent for earnings of over 50,000 pesos (about $2,000) -- adopted in 1994, remains in the new code for the self-employed, small businesses and farms.

    It also includes a series of new deductions to stimulate their work. For example, farmers may deduct up to 70 percent of income as costs.

    'Can't spare a single peso'
    Eventually all workers will pay income taxes as well as a new 2 percent property tax, but both measures are suspended until "conditions permit" them to go into effect.

    The government admits, with an average pay of about 450 pesos per month (or $19), many workers do not earn enough to make ends meet.

    Cuba to let its people leave the country?

    "They collect taxes for all these things around the world, it's normal," said Havana economist Isabel Fernandez.

    "But here we face two problems. On the one hand we are not used to paying for anything and on the other our wages are so low we can't spare a single peso," she said.

    Under the old system, large and small state-run companies, which accounted for more than 90 percent of economic activity, simply handed over all their revenues to the government, which then allocated resources to them.

    Cuba detains 70 'Ladies in White' ahead of Pope visit

    The reforms call for large state-run businesses to be moved out of the ministries and become more autonomous.

    The state-owned Cuban National News Agency said Cuba had studied the tax systems of a number of other countries, including several with capitalist economies.

    "The experiences of China, Vietnam, Venezuela, Brazil, Spain and Mexico were taken into account, but they were refined to the particularities and conditions of the island," the news agency said. 

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  • Report: Italian castle seized in tax probe involving sale of Hugo Boss

    By NBC News staff and wire reports

    MILAN, Italy – Police in Italy have seized assets worth $83.5 million - including a 15th century castle - in a tax probe involving the sale of fashion houses Hugo Boss and Valentino in 2007, according to reports.

    Italy's tax police said on Monday they had confiscated real estate, land and corporate holdings of 13 people "linked to one of Italy's most important families in the fashion and textile sector."

    A person familiar with the investigation told Reuters the 13 people in question were linked to the Marzotto group, and included members of the Marzotto family.

    Marzotto sold Valentino Fashion Group - then including both the Valentino label and Hugo Boss - to private finance group Permira in 2007 in a deal worth $6.8 billion. Those under investigation are suspected of not having filed tax returns.

    The Financial Times of London reported that the seized assets included apartments in Milan and Rome, a 25-room villa in Alpine resort Cortina d’Ampezzo and land. It said a 50-room castle, Villa Trissino Marzotto, near the town of Vicenza, was also seized.

    'Totally groundless'
    The Italian government has set fighting chronic tax evasion as one of its priorities as it seeks to come to grips with the country's towering debt crisis and find resources to fund growth.

    Lawyers representing the Marzotto family said the decision taken by Milan prosecutors ordering the seizure was "totally groundless".

    The lawyers said bank documents showed capital gains from the operation had been declared and taxed.

    "I acknowledge the seizure measures. I think it right only to point out that I did not have any operative position in the company in which I was minority partner," Matteo Marzotto, a board member of the textile family group, said in a statement.

    The technocrat government of Prime Minister Mario Monti has described the fight against tax evasion as a state of war and has stepped up monitoring and collection efforts.

    Damir Sagolj / Reuters

    Italy's Prime Minister Mario Monti arrives for a session at the Asia-Europe Meeting summit in Vientiane, Laos, on Monday.

    Earlier this year the head of Italy's Inland Revenue service, Attilio Befera, said tax evasion totaled about $150 billion.

    A spokesperson for the Marzotto Group declined to comment, saying the news did not involve the company or any of its units.

    Police said in a statement the probe revealed that a Luxembourg-based holding company used by the Marzotto Group in the sale made a capital gain of nearly 200 million euros, resulting in tax evasion of 65 million euros.

    "The investigation... revealed that a financial holding company purposefully created in Luxembourg was instead administered from Italy," the police said.

    Reuters contributed to this report.

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  • Britain's PM eats humble pie over snack tax

    Matt Cardy / Getty Images, file

    In days gone, pasties were the food of miners and farmers -- a robust parcel that (so legend has it) could be dropped steaming hot down a mine shaft or thrown over a high hedge to the agricultural laborers on the other side.

    By Chris Hampson, NBC News Director of International News

    LONDON -- We're a placid bunch, us Brits.

    You can call us names and poke us in the eye and we'll pretty much stand there and take it.

    So pity the poor misguided chaps who run this country and who decided to try their luck by introducing a tax on ... pasties.

    Man the barricades!


    For those who are not among the cognoscenti, a pasty is a traditional and tasty food that resembles a meat and potato pie. It has almost iconic status in its place of origin, the distant and beautiful county of Cornwall.

    In days gone by, it was the food of miners and farmers -- a robust parcel of pastry (so legend has it) that could be dropped steaming hot down a mine shaft to the menfolk below or thrown over a high hedge to the agricultural laborers on the other side.

    According to folklore, in one end there was savory meat, spuds and turnip and -- on the other side of a pastry wall -- fruit jam.  Entree and dessert all in one steaming package.  Genius.

    Wpa Pool / Getty Images, file

    David Cameron eats a pastry during an election campaign stop on May 1, 2010 in Woodstock, southern England.

    No wonder a simpler version was adopted all across the country.  It has become a staple of many a working lunch, snatched from the oven of a high street food store and wolfed down on the nearest bench or at a desk.

    Library opened by Mark Twain falls victim to austerity cuts

    So into this culinary sanctum stumbled the British government.  Always anxious to raise more cash in these dark days of austerity, the Chancellor of the Exchequer George Osborne decided back in March to slap a 20 percent tax on hot snacks like pasties, pies and sausage rolls.

    The plan was to raise an extra $150 million.

    But Osborne -- a millionaire whose diet does not apparently include pasties -- had no idea that he was about to walk into a political furore that we have seldom seen since the 1990 Poll Tax riots. 

    "Half-baked," screamed the tabloids.  "Save our pasties," the nation echoed as people licked their lips and bared their teeth.

    A newspaper hired an actress dressed as Marie Antoinette to pursue the hapless Chancellor -- a reminder of her infamous quote that led to revolution across the Channel: "Let them (the poor) eat cake."

    Justin Tallis / AFP – Getty Images

    Bakers and their supporters hold pastries as they gather outside the prime minister's official residence in London in April to protest and deliver a petition against the so-called pasty tax.

    The accident-prone Conservative-led government had walked into a minefield of meat and potato proportions. Politicians rushed to have their photos taken stuffing pasties down their throats.

    NBC News' UK partner ITV News on pasty debate

    Even Prime Minister David Cameron was wrong-footed when asked in Parliament when HE had last eaten a pasty.  He claimed to have done so at a shop that closed down some years ago. Ouch!

    So yesterday Cameron and Osborne decided on a change of diet: humble pie.

    The Sun's front page story on the British government's 'pastygate' climbdown on Tuesday.

    In a humiliating climb-down, the government was forced to abandon its snack tax.

    Well, almost.  In a wonderfully British muddle, pasties will avoid tax if they are hot but cooling down out of the oven.  If the shop keeps them hot -- that will be another 20 percent please.

    Telegraph video: David Cameron remembers his last pasty

    No matter.  Today's papers speak for the nation in declaring victory, with the mass market Sun saying it best: "Pasty la vista, taxman."

    Peace has broken out in Britain's leafy suburbs and town centers. One joyous Cornish Member of Parliament said there'd be "dancing in the streets."

    But the message to our politicians is clear.

    There is, after all, a line you cannot cross.  Our trains may not run when it rains or snows; you may not get through airport passport controls for hours; but mess with our favourite foods and we WILL bite back.

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  • Letter bomb explodes at tax collection office in Rome

    By msnbc.com wire services

    Update: 1 p.m. ET

    ROME -- The ANSA news agency says a flyer of the Informal Anarchist Federation was found inside the package.

    The group claimed responsibility for a thwarted attack against the chief executive of Deutsche Bank this week and warned in that claim that there would be two more "explosions."

    Update: 10 a.m. ET

    ROME - A letter bomb exploded Friday at an office of Italy's tax collection agency, slightly wounding the organization's director. Police were probing possible links to an Italian anarchist group that claimed credit for a thwarted attack against the chief executive of Deutsche Bank this week and warned there would be two more "explosions."

     

    A Rome police official, who spoke on customary condition of anonymity, said the bomb was in a yellow bubble envelope mailed to the director's attention at an Equitalia office on the outskirts of Rome. He said there was no direct evidence yet linking Friday's bomb to the one Wednesday in Frankfurt, Germany, but that police were on high alert.

    The Italian group, known as the "Informal Anarchist Federation" claimed responsibility for package bombs sent to three Rome embassies around Christmas last year.

    The tax agency director, identified by the government as Marco Cuccagna, suffered a light hand injury. His eyes were not injured, contrary to an earlier report. He was taken to a hospital for treatment, Police Chief Francesco Tagliente told The Associated Press.

    "We are working to try to understand the dynamic of what happened," Tagliente said at the scene. "The director opened an envelope that exploded, and he was injured on his hand."

    Premier Mario Monti, who is pushing a package of tax hikes and spending cuts to help Italy solve a financial crisis, issued a statement expressing solidarity with Cuccagna.

    "Equitalia has always done, and continues to do, its duty in full compliance with the law. It performs an essential role for the functioning of the state, without which it would be possible to provide services to citizens and their families," said Monti, who is in Brussels for a European Union summit.

    'Banks, bankers, ticks and bloodsuckers'
    On Wednesday in Frankfurt, a routine mailroom screening found a bomb contained in a small package that was addressed to Deutsche Bank CEO Josef Ackermann. The explosive was deactivated without incident.

    Tucked alongside that bomb was a letter of responsibility from the anarchist group.

    The letter, written in Italian, promised "three explosions against banks, bankers, ticks and bloodsuckers," according to the Hesse state Criminal Office. Authorities said Thursday that they were worried that two bombs remained undetected.

    On Dec. 23, 2010, identical package bombs exploded at the Swiss and Chilean embassies in Rome, badly wounding the two people who opened them. A third bomb was safely defused at the Greek Embassy four days later.

    The anarchist group, known by the acronym FAI, claimed responsibility for the embassy bombs, saying it was acting in solidarity with jailed Greek anarchists who had asked their comrades to organize and coordinate a global "revolutionary war."

    Extreme left-wing and anarchist movements have existed for decades in Europe. They staged deadly attacks across the continent in the 1960s and 1970s.

    Though more sporadic in recent decades, official figures show attacks linked to such groups are on the rise, with most of the incidents in Italy, Spain and Greece.

    Greece, Spain and to a lesser extent Italy have been hit hard by government cutbacks and unemployment resulting from a continent-wide debt crisis.

    The Associated Press and Reuters contributed to this report.