Tag Archives: green
UK To Set Up Central Tax Register
http://www.ft.com/cms/s/0/4cc97bdc-d50f-11e2-9302-00144feab7de.html#ixzz2X2GDwrSe By George Parker, Jim Pickard and Vanessa Houlder Britain is to lead by example in its push for greater tax transparency by setting up a new central register to try to ensure that the true owners of shell companies – often located in tax havens – pay their taxes. David Cameron hopes to persuade other big economies to set up similar registers when he chairs the G8 summit in Northern Ireland next week, a move designed to recover the billions of pounds in lost revenue suffered by exchequers around the world. On Saturday he promises that Britain will set up a register – to be maintained at Companies House – which would initially be available only to relevant authorities including Revenue & Customs. Campaigners for greater tax transparency want the registers of “secretive companies in secretive locations” to be made public, but Mr Cameron told The Guardian that Britain would not go down that route for now unless other countries did the same thing. “I am sure that is where I would like to end up, but I do not want to disadvantage Britain by doing something others won’t do,” he said. “I don’t also want to give up our leverage on others by trying to make them move at the same time.” Under the changes, companies registered in Britain would come under a legal obligation to obtain and hold adequate, accurate and current information on the ultimate owner who benefits from the company. Meanwhile Mr Cameron has been told by the head of one of the UK’s Caribbean dependencies to sort out tax avoidance in the City of London before he lectures Britain’s overseas territories on the issue. The comments from Hubert Hughes, the 79-year-old first minister of Anguilla, will raise doubts over whether the prime minister will be able to achieve unanimous support for a new deal on tax evasion. Mr Cameron wants to nail the agreement ahead of next week’s G8 summit and has organised a pre-summit meeting at Lancaster House, London, on Saturday with leaders of the British Overseas Territories and Crown Dependencies Mr Hughes, speaking to the Financial Times at a Whitehall hotel, said that, although he backed the spirit of a new deal on tax evasion, the overseas territories had not been given enough time to sign up to a new multilateral deal on tax. “I’m worried about the fact that we are being accused,” said Mr Hughes. “This is very hypocritical as we are being compliant … I think the City of London needs to put itself in order. I always consider the City as the biggest money-laundering centre in the world.” Mr Hughes has written to Mr Cameron saying Anguilla was prepared “in principle” to support the multilateral convention on tax. But the letter says: “Before we are able to support this convention we have serious questions about its implementation and in particular the resourcing of such an agreement in Aguilla.” The island would only support the deal if it received assurances from the government that these concerns were resolved, he wrote. Anguilla, in the Lesser Antilles, which is just 13 miles long and has a population of 13,000, is renowned for its white sandy beaches and minimal tax rates. Mr Hughes said that his island had already signed 17 bilateral “exchange of information” agreements with other countries. His comments come after the premier of Bermuda, Craig Cannonier, warned earlier this week that he needed clarification from London before he would sign up to the convention on mutual tax assistance. This treaty would allow future talks on helping authorities, particularly in developing countries, to track down tax cheats. Within hours, however, Mr Cannonier publicly shifted his position. “Bermuda is in active discussions with the UK government over Bermuda’s concerns with some of the provisions in the proposed Multilateral Convention Agreement,” he said. “It is wrong to rule out the possibility of agreement before the G8 as implied by the headlines.” It is understood that a Foreign Office minister, Mark Simmonds, had personally telephoned Mr Cannonier within hours of his arriving at Southampton and persuaded him to reverse his earlier position. But the Bermudan prime minister said he still had concerns about “costs, security of data and treaty duplication” that needed to be addressed before he signed up. Campaigners have been putting pressure on Mr Cameron to secure agreement from the Overseas Territories, saying he risks personal embarrassment if they do not sign the treaty having raised the stakes by his public call to “get our own houses in order” before the G8 summit. The Cayman Islands told Mr Cameron last week that they were prepared to commit to joining the convention, but “looked forward to further discussions on the particulars of the convention’s extension to the Cayman Islands, as balanced with the UK’s recognition of our fiscal autonomy.” This week, the British Virgin Islands told Mr Cameron that it would commit “in principle” to joining the multilateral convention. The three Crown Dependencies – Jersey, Guernsey and the Isle of Man – have also committed. But some jurisdictions resent what they see as arrogance and neo-colonialism from Downing Street. The stakes are high with Mr Cameron wanting to come away from the G8 with an agreement over either tax or free trade, where France is blocking a comprehensive EU-US trade deal. Continue reading
Green Fund Aims To Harvest Greenbacks
http://www.ft.com/cms/s/0/f9ec02f2-d43e-11e2-a464-00144feab7de.html#ixzz2X2FIgnpQ By Ellen Kelleher The first agroforestry investment vehicle of its kind is to be listed in Luxembourg within weeks. Moringa, a Sicar co-sponsored by ONF International, the environmental consultants, and La Compagnie Benjamin de Rothschild, will become the first listed investment vehicle to offer the chance to invest in a combination of agricultural and forestry projects across Africa and Latin America. As much as €50m has been raised already for the venture capital investment vehicle, which is looking to cap its fundraising at €120m. The fund’s aim is to crack down on deforestation and promote the development of sustainable land use across sub-Saharan Africa and Latin America while also turning a profit. Investment schemes range from planting 6,500 hectares of cashew trees in Madagascar to the repurposing of 12,500 hectares of unproductive savannah in the Democratic Republic of Congo to produce charcoal. “The fund is very different because you are going to manage your forest, but at the same time you will grow some agricultural products,” says Hugo Ferreira, deputy general manager with La Compagnie Benjamin de Rothschild. “That gives you a diversified income stream during the life of the fund.” Officials in the ONFI’s field offices in Cameroon, Gabon, Brazil and Colombia will assist in finding worthy projects to invest in. The fund’s duration will be 12 years as a minimum. Investments will be made in the first five years and a lengthy holding period will follow. A typical pure-play timber fund, by comparison, has a longer duration of 15 to 18 years. Management fees will be 2 per cent per year and the managers will also take 20 per cent of the capital gain after a hurdle rate of 7 per cent. Continue reading
Unwinding The World’s Biggest Economic Experiment
http://www.ft.com/cm…l#ixzz2X2Dkv6m2 By Gavyn Davies When the Fed does change direction, tightening often comes in a rapid series of interest rate rises ©Bloomberg On Wednesday, the chairman of the Federal Reserve announced that the greatest experiment in the history of central banking might be nearing its end. Ben Bernanke’s announcement included many caveats, but the financial markets did not miss the message. Since 2009, the central bank has been buying financial assets – US Treasury bonds and some types of corporate debt – paid for by an expansion of the monetary base (so-called “printing money”). This kept interest rates low, which damaged savers but helped indebted businesses and households. It has also been the major prop for financial markets. Within about a year, if the Fed’s plans come to fruition, the US government deficit will need to be financed from private sector savings – not by the central bank. Asset markets will be left to fend for themselves as the biggest buyer withdraws from the arena. That is why some hedge funds sold off bonds this week, causing a big drop in their prices – the flipside of which is a rise in borrowing costs (or “yields”). Mr Bernanke has expressed consternation that adjustments to the path for the Fed’s balance sheet, such as the one he announced this week, can have such a profound effect on the bond market. But investors are making logical inferences from central bank behaviour. The Fed does not change direction often. When it does, tightening often comes in a rapid series of interest rate rises that are not fully anticipated by investors. Furthermore, when the Fed was supporting markets, investors had to seek out new sources of income to replace declining interest receipts on their government bond holdings. In this so-called “reach for yield”, some of them leveraged themselves up to buy into emerging markets and bond funds – positions they are now dropping sharply. It is impossible to be sure where deleveraging will end. The last big unwind – a much smaller one – started almost exactly a decade ago. On June 25, 2003 the Federal Open Market Committee met amid expectations of a cut in the interest rate from 1.25 per cent to 0.75 per cent. Vincent Reinhart, the committee secretary, opened the meeting with some gallows humour. “On Friday”, he said “I was in line with my 11-year-old son to purchase Harry Potter and the Order of the Phoenix . . . It is somewhat longer than the briefing papers the committee has received. But it, too, considers an alternative world filled with uncertainty and great perils”. Alan Greenspan was chief wizard at the Fed that day. Mr Bernanke, more radical than he is now, was there, but mostly stayed silent. The committee was fully aware of the dangers ahead when it decided to cut the federal funds rate by only 0.25 percentage points. The market concluded that the Fed was preparing to tighten policy sooner than expected, and sharply adjusted expectations for where it thought rates would be in the years ahead. The same thing happened this week. The previous big Fed exit, announced on February 4, 1994, was even more dramatic. It was a day that triggered such turbulence that it is etched in the memory of all bond traders. Working as a Goldman Sachs economist, I was on the bond trading floor when the Fed released an innocuous-sounding statement. The FOMC had decided “to increase slightly the degree of pressure on reserve positions . . . which is expected to be associated with a small increase in short-term money- market interest rates”. Pardon? After a few moments, there was an explosion of noise as realisation set in. The market was unprepared for the Fed change, Investors were over-leveraged and knee-deep in Mexican debt and mortgages. Equities emerged relatively unscathed. But before the bloodbath ended that November, the survival of the US investment banks was at stake. Mr Bernanke wants this time to be different. His main weapon will be transparency and forward guidance. He says the Fed will end its asset purchases only if unemployment falls below 7 per cent, reducing the risk of tightening before the economy can take it. Short-term interest rates will stay close to zero for a long time after that and eventual rises will be gradual. He wants bond prices to fall slowly, leaving time for the financial system to adjust. There are two risks with the Fed’s exit plan. The first, raised by Paul Krugman and other Keynesian economists, is that it sends a premature signal to the world economy that the central banks will tighten before the private sector recovery has achieved escape velocity. This has happened before: the Fed made this error in 1937-8 and the Bank of Japan in 2006. Macro-economists such as Michael Woodford argue that the main economic effect of the Fed’s asset purchases is that they signal to households and business that the central bank is serious about keeping short rates lower for longer than normal. These stimulatory effects could now be reversed. If so, the US recovery might peter out, taking the global economy down with it. The second danger, in sharp contrast, is that the Fed has left it too late to bring market exposures under control, in which case the unwinding might take bond yields and credit spreads much higher than economic fundamentals seem to justify. In the famous phrase of Warren Buffett, the legendary investor, we only discover who is swimming naked when the tide goes out. Higher bond yields would spell danger for the financial system – and would mean rising mortgage rates at a time when the US housing market is only just starting to recover. The exit from quantitative easing was always going to be long and arduous. There is no historical playbook for the central banks to follow. Like a fighter pilot who has experienced combat only in a flight simulator, the real thing might be very different. The central bankers are confident that they have the technical tools to finish the job but, as Mr Bernanke admits, it will be like landing that plane on an aircraft carrier, and possibly in stormy seas. The writer is chairman of Fulcrum Asset Management and writes a blog on macroeconomics on FT.com Continue reading
