Denmark to cut corporate taxes under growth plan

Updated 27 February 2013
0

Denmark to cut corporate taxes under growth plan

COPENHAGEN: Denmark's government yesterday presented a controversial growth package that would reduce corporate taxes and increase public spending to spur growth and create 150,000 jobs.
The ruling center-left coalition plan calls for a progressive reduction in corporate taxes from the current 25 percent to 22 percent, as well as an increase in public investment of six billion kroner (804 million euros or $ 1.05 billion) to stimulate the economy.
"We are creating jobs now, but we are also getting Denmark ready to grab the economic recovery when the internal slump turns," Social Democratic Prime Minister Helle Thorning-Schmidt told a news conference, adding that while there were no quick fixes, the growth plan was a "step in the right direction."
At the same time, Economy Minister Margrethe Vestager said no new taxes would be imposed on businesses.
"We are sending a clear signal to companies that we do not plan any new taxes and duties for businesses … This is not just a growth package, it is a complete growth plan toward 2020," she said.
The tax cut mirrors neighboring Sweden's lowering of its corporate tax this year to 22 percent from 26.3 percent.
Denmark's corporate tax reduction would however not include a decrease in the tax on labor costs in the financial sector, nor would it apply to North Sea oil extraction.
The proposal also calls for lower energy duties for companies, an increase in planned public sector investment and a reintroduction of tax rebates for Danes who make home improvements.
The plan was met with criticism from Denmark's powerful unions, with eight of them having written an open letter to the prime minister complaining that reduced corporate tax would be at the expense of public investment.
Notably absent at yesterday's three-party news conference was the leader of the Socialist People's Party, Minister of Economic and Business Affairs Annette Vilhelmsen.
Rank and file party members have begun a petition to force the party out of the coalition immediately, or to call a membership ballot on the issue.
At the same time, the left wing Red Greens, normally seen as the government’s safety net in parliament, are calling for the public to act.
Johanne Schmidt Nielsen, the political spokeswoman of the party, which has a collective leadership structure, appealed on Tuesday for the public to demonstrate against the government plans.
But industry reacted positively to the government plan, and the country's chamber of commerce said it would help create jobs immediately.
Danish Confederation of Industries Chief Executive Karsten Dybvad also praised the government initiative.
"The tax burden on Danish companies has become so high that we lose orders and private sector jobs to our competitors in our neighboring countries. Now we have a chance to reverse the situation," he said in a statement.
Danish unemployment fell by 0.1 point to 6.2 percent in December, according to seasonally adjusted data from Statistics Denmark.
The move came one week after a proposal to overhaul the student grant system, and a social security reform that would force all unemployed under-30's to pursue an education rather than live off social security.
All three government proposals must now be negotiated with other parliamentary parties in order to win a majority.
Although the left-wing Red Greens are expected to vote against the government's proposals, center-right parties are expected to approve them.
Unlike its Scandinavian neighbors, Denmark has been dipping in and out of recession since the financial meltdown of 2008, as its banks buckled under a more than 20-percent fall in property prices and toxic loans to debt-laden farmers.


Wells Fargo to pay $1B for mortgage, auto lending abuses

Updated 20 April 2018
0

Wells Fargo to pay $1B for mortgage, auto lending abuses

  • Fine the latest in a series of setbacks for US bank
  • Federal Reserve in February prohibited lender from growing assets until governance issues addressed

Wells Fargo will pay $1 billion to federal regulators to settle charges tied to its mortgage and auto lending business, the latest chapter in years-long, wide-ranging scandal at the banking giant. However, it appears that none of the $1 billion will go directly to the victims of Wells Fargo’s abuses.
In a settlement announced Friday, Wells will pay $500 million to the Office of the Comptroller of the Currency, its main national bank regulator, as well as a net $500 million to the Consumer Financial Protection Bureau.
The action by the CFPB is notable because it is the first penalty imposed by the bureau under Mick Mulvaney, who President Trump appointed to take over the consumer watchdog agency in late November. The $500 million is also the largest penalty imposed by the CFPB in its history, the previous being a $100 million penalty also against Wells Fargo, and matches the largest fine ever handed out by the Comptroller of the Currency, which fined HSBC $500 million in 2012.
The fine against Wells Fargo had been expected. The company disclosed last week that it was in discussions with federal authorities over a possible settlement related to its mortgage and auto lending businesses, and that the fine could be as much as $1 billion.
The settlement also contains other requirements that would restrict Wells Fargo’s business. The bank will need to come with a risk management plan to be approved by bank regulators, and get approval from bank regulators before hiring senior employees.
“While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency,” said Wells Fargo Chief Executive Tim Sloan in a statement.
The $500 million paid to the Comptroller of the Currency will be paid directly to the US Treasury, according to the order. The $500 million paid to the CFPB will go into the CFPB’s civil penalties fund, which is used to help consumers who might have been impacted in other cases. But zero dollars of either penalty is going directly to Wells Fargo’s victims.
The bank has already been reimbursing customers in its auto and mortgage businesses for these abuses. Wells Fargo has been refunding auto loan customers since July and been mailing refund checks to impacted mortgage customers since December.
While banks have benefited from looser regulations and lower taxes under President Trump, Wells Fargo has been called out specifically by Trump as a bank that needed to be punished for its bad behavior.
“Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported, but will be pursued and, if anything, substantially increased. I will cut Regs but make penalties severe when caught cheating!,” Trump wrote on Twitter back in December.
The abuses being addressed Friday are not tied directly to Wells Fargo’s well-known sales practices scandal, where the bank admitted its employees opened as much as 3.5 million bank and credit card accounts without getting customers’ authorization. But they do involve significant parts of the bank’s businesses: auto lending and mortgages.
Last summer Wells Fargo admitted that hundreds of thousands of its auto loan customers had been sold auto insurance that they did not want or need. In thousands of cases, customers who could not afford the combined auto loan and extra insurance payment fell behind on their payments and had their cars repossessed.
In a separate case, Wells Fargo also admitted that thousands of customers had to pay unnecessary fees in order to lock in their interest rates on their home mortgages. Wells Fargo is the nation’s largest mortgage lender.
Wells Fargo has been under intense scrutiny by federal regulators for several months. The Federal Reserve took a historic action earlier this year by mandating that Wells Fargo could not grow larger than the $1.95 trillion in assets that it currency held and required the bank to replace several directors on its board. The Federal Reserve cited “widespread abuses” as its reason for taking such an action.
This settlement does not involve Wells Fargo’s wealth management business, which is reportedly under investigation for improprieties similar to those that impacted its consumer bank. Nor does this involve an investigation into the bank’s currency trading business.
Consumer advocates have been critical of the Trump administration’s record since it took over the CFPB late last year. However, advocates were pleased to see Wells Fargo held to account.
“Today’s billion dollar fine is an important development and a fitting penalty given the severity of Wells Fargo’s fraudulent and abusive practices,” said Pamela Banks, senior policy counsel for Consumers Union.