Greek journalist in court for revealing names of potential tax cheats

This post has been corrected. See the note at the bottom for details.

ATHENS -- A Greek journalist who was arrested after publishing the names of more than 2,000 fellow citizens believed to have stashed about $2 billion in Swiss bank accounts appeared in court Monday to answer charges of breach of privacy.

Kostas Vaxevanis, a prominent investigative journalist and editor of Hot Doc magazine, was arrested Sunday but released hours later pending trial. In an Athens courtroom Monday, his attorney requested a continuance to prepare for a hearing scheduled for Thursday.

"This is a case of utmost public interest, and we want it to be heard," Harris Economopoulos, Vaxevanis' attorney, said in a telephone interview. "We want the truth to come out. Greeks have endured enormous sacrifices, and they are facing yet a new wave of austerity [measures]. They have the right to know whether there is a case of political coverup."

Vaxevanis insists that the published list, which includes the names of high-profile Greek businessmen and politicians -- even the brother of former Prime Minister George Papandreou -- is the same list that former French Finance Minister Christine Lagarde relayed to her Greek counterpart two years ago to help Athens crack down on rampant tax evasion in Greece. His list, however, included more names than Lagarde reportedly handed over.

Since then, successive governments have been accused of trying to cover up the scandal, with two finance ministers and a number of judicial and tax officials shifting responsibility and blame.

Italy's Berlusconi found guilty of tax fraud, sentenced to prison

LONDON -- Former Italian Prime Minister Silvio Berlusconi was found guilty of tax fraud Friday and sentenced to four years in prison, a stunning setback for the media mogul-turned-politician who has dominated Italy's political landscape for the last 20 years.

But Berlusconi, 76, will almost certainly appeal the verdict and is not expected to go to prison anytime soon -- and possibly not at all because of Italian restrictions against putting someone his age behind bars, analysts say.

Still, the conviction is a blow for a man who only a few months ago floated the idea of a comeback as Italy’s leader after having been forced to step down last November. Earlier this week, Berlusconi ended speculation by announcing that he would not run for reelection after all but would focus on grooming younger leaders.

Whether the decision to retire from elected office was made in anticipation of a guilty verdict in the tax fraud trial is unclear. Besides the prison term, the sentence handed down Friday in Milan bars Berlusconi from holding public office for three years, the Italian news agency Ansa reported.

The case centered on purchases by Berlusconi’s company, Mediaset, of television rights for American movies. Prosecutors argued that Mediaset bought the rights through offshore entities and then falsely declared those payments in order to avoid paying taxes.

The trial began six years ago but made only spasmodic progress, partly because of delaying tactics by Berlusconi’s defense team and because of an on-again, off-again immunity law for certain elected officials. He has two levels of appeal open to him, meaning that the case could drag on for some years.

Many Italians believed that Berlusconi would never be convicted for his alleged offenses because of the way his government tried to manipulate the judicial system and because of his vast fortune and political connections.

Aside from the case decided Friday, Berlusconi is also on trial on charges of paying for sex with an underage girl whom he later allegedly tried to spring from police custody by using his political influence. That influence is likely to diminish significantly now, analysts say.

When the flamboyant and controversial former leader announced Wednesday that he would not stand for reelection, Berlusconi told Italian media that his decision to step back was motivated by the same patriotism that induced him to go into politics nearly 20 years ago.

“For love of Italy one can do crazy things and wise things,” he said. “Now I want to take a step back with the same love that moved me to act then.”

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Photo: Then-Prime Minister Silvio Berlusconi in July 2011, four months before he resigned under fire. Credit:  Reuters

Palestinian leaders cancel tax hikes amid protests

JERUSALEM -- Responding to violent protests in several West Bank cities, the Palestinian Authority said Tuesday it would cancel planned tax hikes on cooking gas, fuel and other commodities.

Rising consumer prices in recent months and the authority’s ongoing financial crunch sparked clashes Monday between protesters and Palestinian security officers.

After an emergency cabinet meeting Tuesday, Prime Minister Salam Fayyad said he would offset the lost tax revenue by slashing salaries of top government ministers and other senior officials. He also promised the government would pay partial salaries by next week to government employees who are still awaiting their August paychecks.

Due in part to a drop in international aid over the past two years, the Palestinian Authority is struggling with a monthly deficit of $100 million. Among those nations that have not delivered promised aid is the United States, which pledged $200 million.

Israel has also been alarmed by the demonstrations, which some fear could grow into another uprising against Israel’s occupation of the West Bank. According to a report on Israel Radio, Israeli officials are considering loaning money to the Palestinian Authority or moving up the delivery of monthly tax receipts that Israeli port officials collect on behalf of the Palestinians.

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Photo: Palestinians demonstrate against the high cost of living in the West Bank city of Ramallah on Tuesday. The prime minister pledged on Tuesday that the Palestinian Authority will cancel planned tax hikes on fuel and cut salaries of top officials. Credit: Majdi Mohammed / Associated Press.

'Get lost, you rich idiot!' French howl as tycoon eyes Belgium

As France plans to hike taxes on its richest citizens, the wealthiest man in Europe is making plans of his own -- to become Belgian.

Bernard Arnault, the French tycoon behind the luxury brands of Louis Vuitton, Christian Dior and Moet Hennessy, told the Agence France-Presse on Sunday that though he was seeking dual citizenship in Brussels, he wasn’t trying to dodge French taxes and would pay as usual.

The news nonetheless inflamed the debate in France as its new Socialist government prepares to levy a 75% tax on personal earnings over 1 million euros -- roughly $1.28 million -- a year.

Many were flatly unconvinced that becoming Belgian wasn’t a tax gambit. The French newspaper Liberation declared, “Get lost, you rich idiot!” on its front page, calling Arnault a symbol of selfishness. (Arnault announced Monday that he was suing Liberation for “public insult,” French media reported.) A communist newspaper declared Arnault could love France or leave it.

But the outrage over his words also spilled over political lines, as right-wing politician Marine Le Pen denounced Arnault for his “scandalous behavior,” France 24 reported.

Taxes? In the Cayman Islands? New budget could tax foreigners

The Cayman Islands have long been known as a paradise boasting brilliant blue water, pristine sand -- and absolutely no corporate or personal income tax. That last perk has made them famous as a global tax haven, luring financial companies and investments.

But now the economic downturn has hit paradise too. Tightened belts on the Caribbean islands have led Premier McKeeva Bush to go where the Caymans have never gone before, proposing a 10% payroll tax on foreign workers who make more than $20,000 a year.

Dodging the T-word, Bush called his plan a “community enhancement fee” solely for foreigners who hold work permits, saying the islands would lose at least 500 public workers without it.

To keep foreigners keen on doing business in the islands, Bush said, foreign employees wouldn’t need to chip into the pension system, as they do now.

“Fiscal responsibility has always been the hallmark of my government and always will be,” Bush said Wednesday in a lengthy statement announcing the plan.

The idea has spurred a fervent opposition campaign from both Caymanians and expats who contend that such a tax would drive away foreign business and investment. Some complained it was wrong to impose the tax only on foreigners; others argued that the high cost of living and lower salaries in the islands made a new tax unthinkable for anyone and warned of a slippery slope.

“Instead of making a difficult decision in an election year and finding other ways to reduce expenditure, the government will take what they mistakenly feel is the ‘easy’ option and tax those that are not on the electoral list,” one column on the Cayman News Service website said.

Tax opponents are planning a protest Monday before Bush holds an informational meeting.  A newly created Facebook group called Caymanians & Expats United Against Taxation  had more than 8,800 members as of Friday afternoon. But not all posts on the web page backed its motto.

“McKeeva is doing what he sees as the only recourse to stimulate revenue! Would you Caymanians prefer he tax us all? Wake up!” islander Marilyn Whittaker wrote in defense of the proposal.

Gov. Duncan Taylor cautioned the budget was still in the works, but said the British Foreign and Commonwealth Office had insisted that the islands balance their budget with both savings and new revenue. As a British overseas territory, the Cayman Islands must have their budget approved. The foreign office has yet to weigh in publicly on the plan.

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Photo: Rum Point on Grand Cayman Island. Credit: Cayman Islands Department of Tourism

Israeli economic policy tugged by external, internal forces

JERUSALEM -- With one eye on troubled economies elsewhere and another on protests inside Israel, the government is walking a tightrope these days to balance economic and political needs.

Israeli Prime Minister Benjamin Netanyahu raised the deficit target to 3%, nearly double the government's original target. Netanyahu explained to his cabinet Sunday that this would adjust Israel to the European standard and minimize tax hikes.

Stanley Fischer, governor of the Bank of Israel and one of the world's renowned economists, disapproved and warned that Israel is at a dangerous turning point, partly due to the deepening financial crisis in Europe. Israel's economy weathered the last global recession well, but now, he says, it might not fare so well if the European economy deteriorates.

Nor should Israel count on falling back on the U.S. for guarantees, Fischer said recently at an economic policy planning forum. "There is a problem with our rich uncle today: He is not so rich and not as friendly" as last time," Fischer said, urging the government to set a lower deficit target, cut expenditures and pass a responsible budget.  

In recent years, Israel has adopted a two-year budget. This policy, spurred by finance minister Yuval Steinitz, was designed to streamline expenses and increase governmental stability by sparing the annual ritual of political haggling that takes place as it is prepared each summer. Opponents have complained the two-year budget stifles parliamentary discussion of related policies.

The 2013 budget will be for one year only because of uncertainty that clouds the future of the Eurozone, Stenitz said.

Analysts say it is also because it is an election year, and some have criticized Netanyahu's deficit move as "election economics."

A year ago, socioeconomic protests rocked Israel for months. The protests began with a specific call for affordable housing but rapidly morphed into a movement demanding overall "social justice,"   a more egalitarian distribution of wealth and resources, and reductions in the cost of living.

The government responded with steps that included the expansion of public childcare, government dental care for children, stepped up construction of affordable apartments and increased competition in telecommunications. 

Now, social protesters are  emerging from hibernation, claiming nothing has changed. The early attempts to recapture last year's energy faltered until a series of missteps on part of the authorities, including violent arrests and police summons for activists, brought protesters back to the streets.

The protests are gaining in numbers but still lacking in cohesion. Key activists profess they are split between "reformists," who seek to improve the system, and all-out "revolutionists," who want the entire system and government out.

Activists have set up a discussion tent in Tel-Aviv, where debates will be held with hopes of clarifying the agenda. The municipality that supported the tent-town last year is less cooperative, strictly forbidding activists to camp out in the streets.

While activists seek to define their demands, a recent study shows people's feelings that they work mainly to pay taxes and bills are not unfounded.  According to the Jerusalem Institute for Market Studies, an economic policy think-tank, Israelis will work more for paying taxes than for themselves this year.

Israeli citizens will celebrate "Tax Freedom Day" on July 9, after working 192 days just to pay taxes. According to the report, Israelis have worked more days for the government than for themselves every year since 1990, with the exception of 2010-11. This year, U.S. citizens reached the turning point on April 17. 

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Photo: Israeli Prime Minister Benjamin Netanyahu attends the weekly cabinet meeting in his Jerusalem office on Sunday. Credit: Abir Sultan / Associated Press

Ireland votes on treaty aimed at controlling Europe's deficits

LONDON -- Irish voters went to the polls Thursday in a referendum on a treaty aimed at controlling the runaway deficits of European Union countries.

The voting is being watched throughout Europe. Ireland is the only country to put to the EU plan, instigated by Germany early this year, to a public vote. Irish constitutional law requires public approval on major reforms.

The treaty calls on member states to limit spending and stick to budgetary targets. It aims to coordinate EU fiscal and budget policies and hold annual structural deficits within 0.5% of gross domestic product, with bailout funds from the European Stability Mechanism available to those who ratify.

Fines are to be imposed on those who fail to comply with debt targets.

Of the 27 EU nations, Britain and the Czech Republic have opted out of the treaty, which must be ratified by 12 of the 17 Eurozone states by next March. So far, Romania, Slovenia, Portugal and Greece have approved it. 

Polls indicate that the treaty will pass, but Ireland has a quixotic record on EU treaties.  Two previous referendums -- on EU enlargement in 2001 and a more streamlined EU administration in 2008 -- were rejected by Irish voters, then accepted in a second vote after amendments. This time there will be no second vote for Ireland.

But Irish voters are expected to reluctantly favor more austerity and continued access to EU rescue funding. Ireland has already been saved by a massive European bailout of $108 billion in 2010.

Although one poll shows the treaty passing with 60% support, there is also the specter of low turnout. 

In a last appeal before the balloting, Prime Minister Enda Kenny urged Ireland's 3.1 million voters to "vote yes on Thursday, yes to stability, yes to investment," and give greater credibility to Ireland when it takes over the EU presidency in January.

Fierce criticism of the measure has come from the Sinn Fein opposition party, once the political arm of the outlawed IRA revolutionaries of Northern Ireland but now a legitimate and popular left-wing force in Northern Ireland and the Irish republic. Party leader Gerry Adams told voters not to give up their say over Irish economic policy and "not to write austerity into the Constitution."

Results of the vote are expected to be known by Friday.

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Photo: Posters for and against the EU fiscal treaty are seen outside government buildings in Dublin, Ireland. Credit: Peter Morrison / Associated Press

Jailed oligarch says tax rich Russians: 'the Khodorkovsky rule'

Tuesday wasn't the deadline for filing income tax returns in Russia, but raising rates for  the rich was nonetheless on one oligarch's mind.

From his prison cell in remote northwest Russia, jailed tycoon Mikhail Khodorkovsky proposed his own version of the "Buffett rule," the brainchild of Berkshire Hathaway chief executive and billionaire Warren Buffett to ensure that households with more than $1 million in income each year pay at least as high a rate as middle-class Americans.

Khodorkovsky, who has been penning his thoughts on life on the outside in recent years in the tradition of exiled writers and political activists banished before him, called for the Russian government to tap as much as 40% of inheritances worth more than $30 million to better fund services for the masses.

In his latest lecture carried by Novaya Gazeta on Tuesday, the former head of the now-defunct Yukos oil empire said Russia's tax system is cumbersome, overstaffed and stifling to  entrepreneurism.

"The tax policy looks as if its authors have set themselves the task of creating the best environment for corrupt government executives and putting pressure on businesses by manipulating the ambiguity of the tax code," said Khodorkovsky, a staunch opponent of once- and future-President Vladimir Putin.

The accusations that have kept him behind bars for eight years are widely seen as politically motivated;  among his purported crimes was tax evasion.

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Photo: Mikhail Khodorkovsky under guard in a glass cage at Moscow's Khamovnichesky court Dec. 29, 2010.  Credit: Sergei L. Loiko / Los Angeles Times

Spain unveils unprecedented austerity budget to avoid EU bailout

REPORTING FROM MADRID -- Spain unveiled the most austere budget in its democratic history Friday, with plans to save $36 billion through spending cuts and tax hikes in an effort to comply with European Union rules and convince jittery markets that it won't be the next to ask for a financial bailout. 

Spain's civil service will be worst hit, with salaries frozen and 16.9% cut from government ministries' funding. New taxes will be levied on large corporations and energy, with electricity bills rising by 7%.

But the draft budget does not contain cuts to what many here feared: pensions, welfare and Spain's free healthcare system. The sales tax also remains unchanged. 

Still, it's the most slimmed-down budget any Spanish government has proposed since the country's 1977 return to democracy after the death of military ruler Francisco Franco. Budget Minister Cristobal Montoro noted the historical significance, calling Spain's financial situation "extraordinary."

"We are in a desperate situation when it comes to the fiscal outlook," Deputy Prime Minister Soraya Saenz de Santamaria told reporters. "We're looking to turn the situation around, as well as plant the foundations for growth and job creation."

The budget requires approval by lawmakers, but with Prime Minister Mariano Rajoy's commanding majority in parliament, its passage is assured. That means that some of its provisions can begin to be implemented right away, such as the electricity rate hike, which starts this weekend.

Rajoy rattled nerves and financial markets last month when he admitted that Spain would not be able to lower its deficit to what it promised EU officials in Brussels. He struck a deal with the European Commission to raise the target instead to 5.3% of GDP -- more than three percentage points lower than last year's deficit but still well in excess of the EU's limit of 3%. Since then, Spain's long-term borrowing costs have been persistently high, reflecting investors' concerns about the economy's health. 

Markets here rebounded at the news of the draft budget, which was presented unusually late because Rajoy's conservative government only took power in December. Also Friday, Eurozone finance ministers meeting in Copenhagen agreed to boost the continent's bailout reserves.

The Spanish budget was unveiled a day after millions of workers staged a massive, nationwide strike against labor reforms many perceive as too pro-business, at a time when one in four here is out of work. The strike slowed public transport and sparked scattered confrontations between protesters and riot police, but no serious injuries were reported. 

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Tax on meat pies creates a political stew in Britain

-- Lauren Frayer

Tax on meat pies creates a political stew in Britain

This story has been updated. See the note below.

REPORTING FROM LONDON -- The humble meat pie has become the center of a political furor in Britain after the Conservative-led government’s latest budget would put a tax on some of the nation's favorite hot snacks.

Outlining Britain's annual budget last week, Chancellor of the Exchequer George Osborne added previously tax-free treats such as pasties, sausage rolls and meat pies to the list of hot take-away food and meals bought from hamburger outlets and restaurants that are subject to the 20% value added tax imposed on most retail products and services.

The planned tax, which still must undergo a comment period, calls for all food and drink that is sold at “above ambient air temperature" to be subject to the 20% tax rate. If the item is cold, there is no tax. 

The traditional meat pie of the southwest county of Cornwall is a favorite among the lower-income working population.