Bristol, Conn. (WTNH) -- If you have back to school shopping you'll be happy to hear that the annual sales tax free week is back.
Norm Ginsburg's family has run Insane Irving's clothing store in Bristol since the 1930's, and they've always tried to keep their prices competitive.
However, Ginsburg and every other clothing retailer, large and small, got socked last year, along with consumers, because Governor Malloy's budget eliminated the $50 sales tax clothing exemption that had been on the books for years, raising prices for everyone.
So he was glad to hear that the once a year sales tax free week had not been eliminated because it always generates business.
"There's definitely an increase in business, yeah, you can definitely see people are more, much more motivated to shop," Ginsburg said.
It's a full seven day event that starts this Sunday.
Tax free week was originally started to help with back to school shopping, but adult stuff is tax free too.
And most merchants run special sales to make the week even more attractive for shoppers.
"Good workwear, quality workwear, you can get a pair of boots that are like 100 to 200 dollars and save 12 to 15 dollars...so it's a definite benefit," Ginsburg said.
And the Connecticut Retail Merchants Association, representing 1,000 stores in Connecticut, sees it as a win-win for consumers and the stores.
"They may get other sales, there may be a dynamic affect, which we think because they come in to buy one thing that's not taxable, they might buy something else that is taxable," said Tim Phelan, CT Retail Merchants Association.
That's because expensive clothing and shoes, over $300, are still subject to the tax.
Governor Malloy tried on a pair of boots there Friday as part of his effort to help promote the tax free week to the public.
"Although, we estimate that this can cost seven million dollars in revenue, we want everybody to be aware of it and if that ends up costing us 8 or 9...so be it," said Governor Malloy.
Starting next July, the year-round sales tax exemption for clothing under $25 goes back on the books. The $50 exemption is scheduled to return in July of 2015.
President of the Federation of Austrian Industries (IV) Georg Kapsch has lamented as "counterproductive" the ongoing debate on new or higher taxes in Austria in the run up to the elections, warning that the discussions are proving highly damaging to Austria as a location.
The idea that wealth taxes will solve the budgetary problems of the state, and will then serve to create new jobs in Austria, is "simply wrong," Kapsch insisted.
Alluding to the fact that the tax burden in Austria of 42.2 percent is already significantly higher than the European Union (EU) average of 39.1 percent, and highlighting the high additional labor costs burdening businesses, Kapsch emphasized that Austria has become less competitive over the course of the past few years, as reflected in successive international rankings. Maintaining that Austria should look to its neighboring countries, where there is a much more business-friendly environment, Kapsch made clear that Austria can no longer rest on the laurels of the past, namely times when the country was dubbed "the better Germany."
According to the Austrian industry representative, it is imperative to create jobs in Austria, to ensure the future financing of the welfare state. Rather than constantly slamming those who create jobs, it is therefore vital to encourage entrepreneurs and attract foreign investment, and not to increase the fiscal burden on individuals and corporations, especially given the difficult economic climate, Kapsch said. Implementing structural reforms and prudent expenditure cuts must take precedence over new taxes in the next legislative period, he stressed.
Concluding, the IV president reiterated that further tax rises in Austria must be ruled out as they will merely drive businesses and international headquarters out of Austria. In contrast, structural reforms will increase efficiency and make Austria fit for the future, Kapsch noted, stating that if carried out correctly, this will raise the competitiveness of Austria as a location and create the financial scope for tax relief for all in the future.
by Ulrika Lomas, Tax-News.com, Brussels
15 August 2013
The United States has cut a deal with the Cayman Islands that will smooth implementation in the Caribbean island nation of a new U.S. anti-tax evasion law, while pressuring other low-tax and no-tax countries to follow suit.
Criticized by President Barack Obama and others as a tax haven, the Cayman Islands said it has agreed to cooperate with the Foreign Account Tax Compliance Act (FATCA), enacted in 2010 and set to take effect in July 2014.
The Caymans and the United States have initialed an inter-governmental agreement (IGA) to that effect. The pact is expected to be signed soon, government officials said.
The IGA "will provide certainty to Cayman's significant fund industry with respect to FATCA implementation," Robert Stack, the U.S. Treasury Department's deputy assistant secretary for international tax affairs, said in a statement on Tuesday.
FATCA requires foreign financial institutions to tell the U.S. Internal Revenue Service about Americans' offshore accounts worth more than $50,000. It was enacted after a Swiss banking scandal showed U.S. taxpayers hid substantial fortunes overseas.
The Cayman Islands is one of the world's most popular destinations for investment funds to organize for tax purposes. The island nation of 53,000 people has no income tax and is frequently labeled a tax haven by critics.
In his 2008 presidential campaign, Obama called the Cayman Islands a tax haven.
Banks, funds and other financial institutions that fail to comply with FATCA face a 30-percent withholding tax on their U.S. source income, a penalty that could effectively freeze them out of U.S. financial markets.
With the Cayman FATCA deal in place, Americans "can't use it as a place to hide their money," said Michael Hirschfeld, a tax lawyer with Dechert LLP.
The IGA will ease the FATCA compliance burden on the country's thousands of hedge funds, private equity and mutual funds, which favored an IGA to preserve their access to U.S. markets, said Adrienne Baker, also a tax lawyer with Dechert.
The pact will pressure other low-tax countries, including Luxembourg, Bermuda and the British Virgin Islands, to negotiate FATCA deals with the United States to stay competitive with the Cayman Islands for investment fund business, she said.
The Treasury Department said last November it was exploring IGA deals with a number of low-tax jurisdictions. Ireland and Switzerland, two of the world's favorite low-tax destinations, completed FATCA deals in January and February, respectively.
In all, the Treasury has signed nine IGAs with foreign governments, but is struggling to complete deals with China and Canada, leaving two potential holes in the FATCA dragnet, tax experts said.
The Treasury last month postponed the start of FATCA to July 2014 from January 2014, in part to give U.S. negotiators more time to sign IGAs before the law started.
Other world financial centers are working to comply with FATCA. The Singapore Finance Ministry said in July it was working to finish an IGA. Australia is also close to finishing an IGA, said a tax lawyer familiar with the negotiations.
On August 19, a new registration website is scheduled to open for banks to sign up with the IRS and ensure they are complying with FATCA. Businesses will need to register on this public website by April 25, 2014, to avoid the FATCA penalties.
(Editing by Kevin Drawbaugh and Leslie Adler)
Maputo — The Italian energy company ENI has agreed to pay 400 million US dollars in capital gains tax to the Mozambican authorities.
The tax agreement was announced on Tuesday when the ENI Chief Executive Officer, Paulo Scaroni, met Mozambican President Armando Guebuza in Changara district in the western province of Tete.
ENI heads the consortium exploring for hydrocarbons in Area Four of the Rovuma Basin, off the coast of the northern province of Cabo Delgado, where vast deposits of natural gas, amounting to some 80 trillion cubic feet, have been discovered.
ENI signed an agreement on 13 March with the China National Petroleum Corporation (CNPC), under which CNPC was to pay 4.21 billion US dollars for 28.57 per cent of the ENI stake in Area Four. Since ENI held 70 per cent of the rights to Area Four, this equated to 20 per cent of the total stake.
When, in 2012, the London-registered company Cove Energy sold its 8.5 per cent stake in the gas field in offshore Area One to the Thai state oil company PTT, the Mozambican government imposed capital gains tax at a rate of 12.8 per cent.
But it was reported in March that ENI was exploiting an apparent tax loophole, and intended to pay no capital gains tax at all.
The trick was that CNPC was not buying its stake in Rovuma Basin Area Four directly from ENI. Instead it acquired a 28.57 per cent holding in the subsidiary ENI East Africa, whose sole asset is the block in the Rovuma Basin.
The Paris-based magazine “Africa Energy Intelligence” claimed that this transaction “will enable ENI to skirt around paying tax while putting the full 4.2 billion dollars on its books”.
A source in the Mozambique Tax Authority (AT) confirmed the tax avoidance ploy, and told reporters that Mozambican specialists were preparing a response to the Italian company, in order to collect the capital gains tax owing.
The deal with CNPC was conditional on the Mozambican government agreeing to it - and so eventually ENI had to give way. The end result of these negotiations is that ENI will pay the 400 million dollars of tax on 23 August.
An ENI press release on Scaroni's visit added that the tax agreement also involves ENI building a 75 megawatt power station in Cabo Delgado.
It added that Scaroni discussed with Guebuza Eni's support for Mozambique's infrastructure development, including the reconstruction of the coastal road between the Cabo Delgado provincial capital Pemba, and the town of Palma, near the Tanzanian border, along with training, childcare, health and maternity initiatives.
ENI's share in Area Four of the Rovuma Basin has now been reduced to 50 per cent. Its partners are CNPC (20 per cent), GalpEnergia of Portugal (10 per cent), Kogas of Korea (10 per cent), and Mozambique's National Hydrocarbons Company, ENH (also 10 per cent).
The Coalition has signalled it may keep Labor's savings measure of a 50% increase in the tobacco tax, owing to what Tony Abbott described as a "budget emergency".
Abbott said he would be reluctant to reject tobacco savings measures announced by the Treasurer, Chris Bowen, just over a fortnight ago, even though the opposition has been highly critical of them.
"Given there is a budget emergency, we are going to be very reluctant to reject measures, even measures such as [the tobacco excise], that we don't like," Abbott said.
The tobacco tax rise, a 50% increase over four years, raises the price of an average pack of cigarettes by a dollar in the first year and by up to $5.25 by the end of 2016. It will push the price of a packet of cigarettes to more than $20 in 2016 and is expected to raise $4bn.
The excise change was part of $17.2bn worth of savings measures announced by the government before the election campaign, which also included changes to the fringe benefits tax rules on company cars and a 0.05% levy on bank deposits to cover bank bailouts.
The Coalition remains opposed to the latter measures.
When the tobacco tax rise was announced, Abbott said the measure showed Labor "always looks to increase taxes on the Australian people".
"The government is promoting this as some kind of health measure," Mr Abbott told reporters two weeks ago. "Wrong, it is a revenue measure, it's just another tax.
"All of these, whether it is a bank deposit tax, whether it is an increase in cigarette tax, it's all a hit on you the people."
Abbott's "budget emergency" comments while he was in Launceston, where he announced plans to set up a Tasmanian major projects approval agency and to spend $400m to upgrade the Midland highway, $38m to expand Hobart airport and $24m to build a centre for Antarctic and Southern Ocean research.
The prime minister, Kevin Rudd, was campaigning in Darwin, where he visited the Robertson barracks before heading to Western Australia.
Abbott again refused to say when the Coalition would outline its costings but said more would be announced "in coming days".