State Sponsored Theft

In an action that can only be described as "state sponsored theft", depositors in Cypriot banks will be hit with a one off tax on their savings, as part of the €10 billion bailout for Cyprus from the euro zone and the International Monetary Fund.

Accounts with more than €100,000 will be taxed at 9.9%, those with less at 6.75%. The money will be taken on Tuesday (Monday being a bank holiday).

It is clear that the governments of the Eurozone will do anything to keep the failed Euro experiment alive, resorting to state sponsored theft as and when required.

Clearly those with money deposited in Eurozone accounts cannot trust the governments of the Eurozone. Anyone with any commonsense will withdraw their money immediately, and place it outwith the Eurozone.

Oh and by the way, the fact that the money will not be taken until Tuesday gives people three days to empty their accounts via ATMs.

Rest assured this insane idea will cause a run on the banks in Cyprus, and will cause catastrophe in the financial markets on Monday.

Greece On Strike and Ready To Explode

Despite the fact that the media's attention had temporarily moved away from Greece over the past few weeks, the fundamental problems blighting the Greek economy (and by definition the Eurozone) have not gone away.

Today Greece is at a standstill as there is a general strike, called in protest against the ongoing austerity forced upon the people by the Eurozone and the criminal irresponsibility of earlier Greek administrations.

Reuters reports that 60,000 Greeks took to the streets of Athens today beating drums and chanting "Robbers, robbers!", they marched to parliament in the biggest anti-austerity protest so far this year.

Much of Greece has been brought to a standstill.

President Karolos Papoulias is quoted by Greek Reporter:

“We are faced with a societal explosion if any more pressure is put on society.”

The tipping point will be when the government finally runs out of money, and is unable to pay the workers. That point is approaching fast, as local media reports that 2.5 million tax payers will be sent notices next month demanding overdue payments which indicates that tax revenues are falling far short of collection targets.

BBC Berates Barclays

Barclays and the BBC have fallen out over claims in a Panorama programme entitled "Inside Barclays: Banking on Bonuses", to be broadcast tonight, that Barclays misled shareholders.

As per the BBC:

"After a series of controversies, bosses at Barclays say they're changing the culture of the bank. But what went wrong? Reporter Richard Bilton investigates the bonus culture that drove one of our biggest banks."

Panorama will accuse Barclays wrongly naming Manchester City owner Sheikh Mansour as the source of £3BN of bail-out money received during the banking crisis in 2008. The money helped Barclays stave off a government rescue akin to the ones used to prop up RBS and Lloyds TSB.

Panorama will state that the money came from the Abu Dhabi government, and that this was not properly disclosed in its 2008 accounts.

However, Barclays contest that it re-drafted all financial documentation “overnight” once the change had been identified except for one mention in the accounts, which it blames on a “simple drafting error”.

Barclays are quoted by the Evening Standard:

“We have repeatedly demonstrated to Panorama why the allegations which they plan to make in their programme are completely unjustified. 

Barclays is satisfied that the steps taken to disclose the change in ownership of the companies which were investing in the bank in 2008 were entirely appropriate. The change in ownership of the investing companies had no bearing on the transaction or required approvals.”

Professor Alistair Milne, an expert on financial regulation in the City, said banks are expected to release accurate information about major deals.

"Any discrepancy of that kind is serious because it raises questions in the minds of investors. Every bank is well aware the annual report is a critical document and a huge amount of time and attention is put in to trying to get all the details correct."

For good measure, the programme also claims that Barclays helped clients avoid tax on an “industrial” scale.

Greece's New Fence

Today's announcement by Greece that it has completed its "anti immigration" fence along its border with Turkey could not have come at a better time, for it seems that it is still struggling to collect back dated taxes.

The Washington Post reports:

"The European Union says that Greek tax collection is still falling well short of some key targets that need to be met to reduce the government’s staggering debt pile.

The EU’s task force to help Greece overcome the crisis that brought it to the brink of bankruptcy said in Monday’s quarterly report that Athens still has trouble to deal with old, outstanding tax claims. With 2 months to go in 2012, it was still about a billion euros behind the EU target of recovering €2 billion."

The fence will not only help prevent immigration, but also stop Greek citizens escaping from their own country.

Spain Appeases The Gods of Austerity

The Spanish prime minister, Mariano Rajoy, has announced more sweeping austerity measures; including a rise in VAT and other taxes, increases to spending cuts and suspending Christmas bonuses for civil servants.

The measures are designed to cut Euro65BN from Spain's budget deficit by 2014.

Among the measures proposed are a 3% rise in VAT, cuts in unemployment benefit and civil service pay and perks. There will also be new indirect taxes on energy, plans to privatise ports, airports and rail assets and a reversal of property tax breaks.

For the moment, it appears that pensions have come out of the cuts unscathed. However, as and when the plans unravel, doubtless pensions will be placed on the altar for sacrifice to the gods of austerity.

Spanish banks will receive up to Euro100BN of aid, whilst the Spanish people pay the price of saving the banks.

Suffice to say, the plan will unravel.

The Secrets of The Taxman - #Taxman

Those of you who "enjoy" paying tax should make an effort to watch this programme tonight:

The Secrets of The Taxman

The Budget - Summary and Details

Here is a link to the details of today's Budget as per HMT:

Budget

Whilst here are the headlines of today's budget (source):

Tax changes

The personal allowance will rise to £9,205 in April 2013

• The top rate of Income Tax will reduce from 50 per cent to 45 per cent in April 2013.
• The Income Tax personal allowance (the amount you can earn before you pay tax) will increase to £9,205 in April 2013.
• Age related allowances will be frozen from April 2013, moving towards a simpler, single personal allowance for everyone regardless of age.
• From 2014-15, taxpayers will receive a new Personal Tax Statement, telling them how much Income Tax and National Insurance they have paid and what their money is being spent on.
• Income Tax reliefs that aren't already capped will be capped at £50,000 or 25 per cent of income, whichever is higher.
• The main rate of Corporation Tax will reduce by an additional 1 per cent from April 2012.

The new Income Tax rates for the 2012-13 tax year were published in December 2011 and will start on 6 April 2012.

• Budget 2012 - New Income Tax rates 2012-13

Benefits

Child Benefit will be withdrawn for households where someone has an income of more than £50,000

• Child Benefit will be withdrawn when someone in a household has an income of more than £50,000. The benefit will be withdrawn gradually; 1 per cent of Child Benefit for every extra £100 earned over £50,000. Only those with an income of more than £60,000 will lose all their Child Benefit.
• Servicemen and women serving in operations overseas will receive 100 per cent relief on an average Council Tax bill.

The new rates for the State Pension and benefits for 2012-13 were published in December. These rates start in April 2012.

• Budget 2012 - new pension and benefit rates

Alcohol and tobacco

• Duty rates for alcohol will rise on 26 March 2012 at the same rate as last year - two per cent above inflation. The government will shortly be publishing an Alcohol Strategy to address alcohol abuse.
• Duty on tobacco will rise by five per cent above inflation - a rise of 37p on a pack of cigarettes. This will come into force at 6.00 pm on 21 March 2012.

Motoring and travel

• Vehicle Excise Duty (car tax) will increase by inflation only.
• The government will take forward many of the recommendations from Alan Cook’s independent review of the road network, including developing a national roads strategy.
• The government will also consider new ownership and financing models for the national road network.

Housing

• A new Stamp Duty Land Tax rate of 7 per cent will be introduced for residential properties over £2 million from 22 March 2012.
• The Stamp Duty Land Tax charge applied to residential properties over £2 million bought into a corporate envelope will be increased to 15 per cent from 21 March 2012. There will be a consultation on the introduction of an annual charge on £2 million residential properties which are already contained in corporate envelopes.
• A New Buy Scheme was introduced last week to help those who cannot afford the larger deposits that some mortgage companies demand.
• The government will fund an extra £100 million of improvements in the accommodation of the armed forces and their families.

Pensions

• The current system, where pensioners can receive an additional State Pension as well as their basic pension, will be simplified. This means that future pensioners will receive only one single-tier pension, based on contributions. This is currently estimated at around £140.
• There will be an automatic review of the State Pension age to ensure it keeps pace with increases in life expectancy. Details of how this will work will be published this summer.
• There will be no changes to pension relief.

Employment

• The National Minimum Wage will increase by less than inflation, as recommended by the Low Pay Commission, to support employers and help protect jobs.
• Sunday trading laws will be relaxed during the Olympics and Paralympics.
• National Minimum Wage rates to rise in October

Digital economy

• The government has committed to providing 90 per cent of the population with access to superfast broadband.
• There will be improved mobile phone coverage for rural areas and along key roads.
• Belfast, Birmingham, Bradford, Bristol, Cardiff, Edinburgh, Leeds, London, Manchester and Newcastle are to become broadband super-connected cities, as part of the £100 million investment announced at the 2011 Autumn Statement.
• £50 million will be used to fund a second wave of smaller cities.

The economy

The UK economy is predicted to grow by 0.8 per cent this year, and 2 per cent in 2013

• The independent Office for Budget Responsibility’s (OBR) forecasts for UK growth and inflation are broadly unchanged from its November forecasts.
• Growth: its growth forecast for the UK this year is 0.8 per cent; they forecast growth of 2 per cent in 2013, 2.7 per cent in 2014, and 3 per cent in 2015 and 2016.
• Inflation: expected to fall from 2.8 per cent this year to 1.9 per cent next year, and then 2 per cent by 2016
• The OBR’s forecast for the unemployment rate is unchanged from last Autumn - the rate is expected to peak this year at 8.7 per cent and fall to 6.3 per cent by 2016.
• Borrowing: public sector net borrowing (PSNB) is expected to total £126 billion this year, falling to £120 billion next year. It is then forecast to to fall to £98 billion in 2013-14, reaching £21 billion by 2016-17.

Germany Trying To Sabotage Greek Bailout

I noted last week that "the IMF regards the EFSF as a busted flush, and has no intention of throwing any more money into the doomed project".

Unsurprisingly, the G20 have now stated categorically in their end of summit communique that no money will be forthcoming until the Eurozone puts more of its own money in, and that it is "essential" that the Eurozone boosts its own firewall first.

Meanwhile, as if deliberately trying to further humiliate and antagonise the Greeks, the German Finance Ministry has announced that more than 160 German tax collectors have volunteered for possible assignments in Greece.

Anyone would think that the Germans were deliberately trying to sabotage the bailout, and force the Greeks to walk away from it!

Given that German Finance Minister Wolfgang Schaeuble doesn't believe that the bailout will succeed, it is in Germany's interests that time and money are not wasted on it.