Yahoo sees several flaws in $2.7 billion Mexico ruling: source

SAN FRANCISCO (Reuters) – Yahoo Inc believes it has “numerous” grounds to appeal a Mexico City civil court‘s $ 2.7 billion preliminary judgment against the company, including both errors in procedure and in application of law, a person familiar with the matter told Reuters on Monday.

The ruling in the case, which involves allegations of breach of contract related to an online yellow pages listings service, was made by the 49th Civil Court of the Federal District of Mexico City, Yahoo said on Friday.

The case has perplexed many investors and tech-industry observers since Yahoo disclosed it, particularly given the large value of the “non-final” judgment.

The lawsuit was brought by Worldwide Directories S.A. de C.V. and Ideas Interactivas S.A. de C.V. against Yahoo and Yahoo de Mexico, Yahoo said.

The companies could not be reached for comment, although Carlos Bazan-Canabal, who describes himself as a founder of Worldwide Directories, told Reuters via email that he had contracted a U.S.-based law firm to handle the Yahoo case.

He declined to comment further on the matter.

Bazan-Canabal operates a number of web sites. He said on one that he joined Yahoo in 1999, adding that he is a former executive of Yahoo Mexico, and that he helped to launch that company. Yahoo could not immediately be reached for comment on this.

The details of the suit remained unclear on Monday. Documents from local courts in Mexico are not available for public consultation. Yahoo declined to comment.

Yahoo signed a commercial relationship with the two companies in 2002, the person familiar with the matter said. Yahoo terminated the relationship with the companies in 2009, the person said.

Yahoo’s appeal is expected to be heard by a panel of three judges in a superior court in Mexico City, the person said who was not authorized to speak publicly on the matter. It was not clear when Yahoo might file its appeal.

Yahoo’s most recent 10Q filing, which lists major ongoing legal proceedings, makes no mention of the lawsuit.

“We believe the $ 2.7 billion figure appears high based on the seemingly small size of Yahoo’s business in Mexico, but we believe shares could trade off modestly on the news,” wrote JP Morgan analyst Doug Anmuth in a note to investors following Friday’s announcement.

“It’s not clear how the Mexican court arrived at the $ 2.7 billion figure, but it would represent 40 percent of our projected 2012 year-end cash balance for Yahoo,” and equate to about $ 2.30 per share, he wrote.

Shares of Yahoo closed Monday’s regular session down 1.2 percent, or 22 cents, at $ 18.55.

(Additional reporting by Dave Graham in Mexico City and Sarah McBride in San Francisco; Editing by Bernard Orr)

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U.S. hospital chain HMA’s shares fall after TV report

(Reuters) – Shares of Health Management Associates Inc fell about 5 percent on Monday after the television news program 60 Minutes aired a story describing aggressive patient admissions policies allegedly pursued at the company’s U.S. hospitals.

The story included interviews with several former employees of the hospital chain who said they were pressured to meet quotas for admitting patients.

HMA Senior Vice President Alan Levine told 60 Minutes the allegations were “absolutely wrong”.

In a statement released after the 60 Minutes broadcast, the Naples, Florida-based hospital company said the report found no issues with the quality of care at its hospitals and relied entirely on “disgruntled” former employees and contracted physicians.

“Neither 60 Minutes nor the physicians interviewed identified any admission decision in which a physician’s medical judgment was overridden by an HMA executive, much less to defraud Medicare,” HMA said.

HMA, which operates 70 hospitals in 15 states, said admissions rates from its emergency rooms were in line with industry standards and consistent over several years.

The company held a conference call for investors on Friday ahead of the 60 Minutes report in which Levine said that HMA’s review showed there was no basis for an allegation of increased admissions through the company’s emergency departments.

CRT Capital Group analyst Sheryl Skolnick cut her rating on HMA shares to “sell” from “fair value”, citing the Medicare fraud allegations in the 60 Minutes report.

“We believe there is significantly greater risk of a deeper/wider (government) investigation and a substantially higher risk that HMA may have to pay bigger fines to settle it,” Skolnick wrote in a note to clients.

Among those interviewed for the television show was a former director of compliance for HMA, Paul Meyer, who sued the company for wrongful termination. Meyer accused the company of committing Medicare fraud by billing the government for hospital stays that did not meet government standards for admission or reimbursement.

HMA said it hired an outside law firm to investigate Meyer’s allegations, but it found no evidence to support an allegation of fraud.

HMA shares were down 38 cents, or 4.8 percent, at $ 7.57 in afternoon trade on the New York Stock Exchange.

(Reporting By Susan Kelly; Additional reporting by Bill Berkrot in New York; Editing by Andrew Hay and Marguerita Choy)

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Kutcher’s Steve Jobs, Gordon-Levitt among Sundance premieres

NEW YORK (Reuters) – Ashton Kutcher‘s turn as Apple co-founder Steve Jobs and actor Joseph Gordon-Levitt‘s directorial debut about a modern day Don Juan are leading a slew of star-studded premieres unveiled Monday for the 2013 Sundance Film Festival.

Kutcher stars in “Jobs,” a biographical look at the career rise of Jobs from wayward hippie to charismatic inventor and entrepreneur, which Sundance said Monday will officially close the indie film festival backed by Robert Redford that runs January 17 to January 27.

The premiere lineup also features Gordon-Levitt directing, writing and starring in “Don Jon’s Addiction,” about a self-centered porn-addict attempting to reform his ways opposite Scarlett Johansson, Julianne Moore and Tony Danza.

Behind-the-scenes tales of pornography will also be explored in British director Michael Winterbottom‘s “The Look of Love,” starring Steve Coogan and based on British adult magazine publisher and entrepreneur Paul Raymond.

“Lovelace,” starring Amanda Seyfried and James Franco, tells the story of porn star Linda Lovelace famed for the film “Deep Throat.”

Sundance, the top U.S. film festival for independent cinema held in Park City, Utah, unveiled the premieres section – which typically feature more established directors – after it announced its competition films last week.

Adding to the premieres list is “Before Midnight,” director Richard Linklater’s third film collaborating with Ethan Hawke and Julie Delpy after “Before Sunrise” and “Before Sunset,” in which the audience encounters their characters nine years later in Greece.

New Zealand director Jane Campion will screen her new six-hour epic, “Top Of The Lake,” a haunting mystery about a pregnant 12-year-old girl who disappears, with Holly Hunter.

Other big-name actors in the lineup include Steve Carell and Toni Collette in “The Way, Way Back,” Naomi Watts and Robin Wright in “Two Mothers”, Dakota Fanning and Elizabeth Olsen in “Very Good Girls,” and Shia LaBeouf and Evan Rachel Wood in “The Necessary Death of Charlie Countryman.”

Australian actresses Nicole Kidman, Mia Wasikowska and Jacki Weaver star in psychological thriller “Stoker,” which marks South Korean director Park Chan-wook’s English-language debut.

WIKILEAKS, POLITICS LEAD DOCUMENTARIES

Among documentaries premiering at Sundance in January is Oscar-winning documentary filmmaker Alex Gibney’s insight on WikiLeaks, the power of the Internet and the beginning of an information war in “We Steal Secrets: The Story of Wikileaks.”

Author and documentarian Sebastian Junger chronicles the life of late photojournalist Tim Hetherington in “Which Way Is The Front Line From Here?” after Hetherington’s death in Libya in 2011. The photojournalist had collaborated with Junger on the 2010 Oscar-nominated film “Restrepo” about the Afghanistan war.

“The World According to Dick Cheney” promises to examine the former vice president while “Anita” profiles how Anita Hill’s allegations in 1991 of sexual harassment against then-U.S. Supreme Court nominee Clarence Thomas brought sexual politics into the national consciousness for the next two decades.

“Linsanity” offers a portrait of basketballer Jeremy Lin and “Running From Crazy” follows actress Mariel Hemingway, granddaughter of Ernest Hemingway, and her insights into her family’s mental illness and suicide.

“Pandora’s Promise” looks at a growing number of environmentalists and anti-nuclear activists changing their minds after decades of opposition to support nuclear power.

Continuing the rise of music documentaries in the last several years, Foo Fighters’ musician Dave Grohl looks at the history of Sound City studios in California, where Grohl’s former band Nirvana had recorded their classic 1991 album “Nevermind.”

Veteran Los Angeles rock band The Eagles will also showcase their past in “The History of the Eagles Part 1.”

(Reporting By Christine Kearney, editing by Piya Sinha-Roy and Cynthia Osterman)

Movies News Headlines – Yahoo! News

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Investors’ Risky Bet on the Ghost of Freddie Past

The post-bailout world abounds with financial incongruities. Witness: Federal Home Loan Mortgage Corporation, or “Freddie Mac,” the government-sponsored agency that by its own admission “makes home possible for one in four home buyers and is one of the largest sources of financing for multifamily housing.” Since the beginning of 2009, it has provided nearly $ 1.6 trillion of funding to the U.S. mortgage market. Albeit under one giant black cloud: Alongside its cousin Fannie Mae, Freddie Mae has been under government “conservatorship (pdf)” since September 2008, after a decade of gorging on risky mortgages that effectively rendered the two insolvent. Washington euphemism aside, taxpayers bailed them out.

Yet Freddie Mac (FMCC) shares—which were thought to be irrelevant since the government formally took over—still trade on the over-the-counter pink sheets, province of penny-stock shops. FMCC is up 40 percent this year. Fannie Mae’s (FNMA) pink-hued stock is up 35 percent.

Exactly what outcome are investors romancing?

For simplicity’s sake, focus on Freddie Mac. At the end of 2006, before housing went to Hades, Freddie sported a market capitalization of $ 45 billion. Today, it’s at $ 955 million. In mid 2010, its old listing (FRE) was moved from the New York Stock Exchange to the OTC bulletin-board, where it was ostensibly left to fall to zero. It proceeded to diminish from $ 1.24 to as low as 19¢ a year ago. Today, it’s back up to 30¢.

“I’m surprised it’s up so much this year,” says analyst Edwin Groshans of Height Analytics. “For the foreseeable future, maybe even up to a decade, Freddie is in limbo, as its profits and dividends have to pass through to the Treasury Department.” (As opposed to making their way to common shareholders). Indeed, through Sept. 30, Freddie Mac has forked over just under $ 22 billion in cash dividends to Treasury, on the company’s senior preferred stock.

With U.S. mortgage finance never so dependent on the government-sponsored agencies, Freddie and Fannie are still touch-and-go stories. Recidivism rates after 12 months for modified subprime mortgages have declined to about 40 percent from almost 80 percent in four years, according to Nomura Securities. As the backstops of last resort, Fannie Mae and Freddie Mac have largely had no choice but to keep stockpiling these still-shaky modified mortgages, which sent their nonperforming loans to a record last quarter; as of Sept. 30, they owned $ 195 billion of restructured loans.

Yet things are looking up. In its latest quarterly report (pdf), Freddie Mac revealed that it was decently profitable—even after paying its dividend to Uncle Sam—and did not need to draw on Treasury funds. This year, Fannie Mae and Freddie Mac have almost doubled what they charge to guarantee bonds. Of course, it helps greatly that the Federal Reserve, sailing the good ship QE3, is now buying at least $ 40 billion a month of Freddie’s agency debt.

According to Bloomberg data, issuance of U.S. government-backed mortgage securities soared 45 percent last month, to the highest since at least 2009. Lenders raced to move up this issuance (which Freddie and Fannie guarantee) before the pair hiked their fees on Dec. 1.

This comes as U.S. home prices rose 4.4 percent for the 12 months ending September.

Maybe the penny stock crowd is hoping residential real estate goes back up so wildly that enough upside will accrue to Freddie Mac’s otherwise-forgotten share price.

But that’s quite a treacherous wager. As blogger and former broker Jon Ogg noted when Freddie was evicted from the Big Board in 2010: “Once these go to the [pink sheets] … the implied upside for any price above zero comes with the notion that the economy could return or even that inflation comes back in a hurry. Ten percent inflation per year would be one short-term cure for housing. It would be like treating a case of the flu with syphilis.”

Businessweek.com — Top News

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Gunmen assassinate peasant leader in Paraguay

ASUNCION, Paraguay (AP) — Gunmen murdered one of the surviving leaders of a peasant movement whose land dispute with a powerful politician prompted the end of Fernando Lugo‘s presidency last June.

Vidal Vega, 48, was hit four times early Saturday by bullets from a 12-gauge shotgun and a .38-caliber revolver fired by two unidentified men who sped away on a motorcycle, according to an official report prepared at the police headquarters in the provincial capital of Curuguaty.

A friend, Mario Espinola, told The Associated Press that Vega was shot down when he stepped outside to feed his farm animals.

Vega was among the public faces of a commission of landless peasants from the settlement of Yby Pyta, which means Red Dirt in their native Guarani language.

He had lobbied the government for many years to redistribute some of the ranchland that Colorado Party Sen. Blas Riquelme began occupying in the 1960s.

By last May, the peasants finally lost patience and moved onto the land. A firefight during their eviction on June 15 killed 11 peasants and six police officers, prompting the Colorado Party and other leading parties to vote Lugo out of office for allegedly mismanaging the dispute.

Twelve suspects, nearly all of them peasants from Yby Pyta, have been jailed without formal charges since then on suspicion of murdering the officers, seizing property and resisting authority. The prosecutor had six months to develop the case and will present his findings Dec. 16.

Vega was expected to be a witness at the criminal trial, since he was among the few leaders who weren’t killed in the clash or jailed afterward.

He wasn’t charged because he was away getting supplies when the violence erupted at the settlement erected by the peasants inside Riquelme’s ranch, the Naranjaty Commission’s secretary, Martina Paredes, told the AP.

“We think he was assassinated by hit men who were sent, we don’t know by whom, perhaps to frighten us and frustrate our fight to recover the state lands that were illegally taken by Riquelme,” she said.

Riquelme, who died of natural causes about a month after the battle in June, occupied the land during the dictatorship of Alfredo Stroessner, whose government gave away land for free to anyone willing to put it to productive use.

A local court in Curuguaty upheld Riquelme’s claim to the land years later. Lugo’s government later sought to overturn the decision, but the case remains tied up in court.

Latin America News Headlines – Yahoo! News

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Holiday fitness gifts trend from high-tech to basic

NEW YORK (Reuters) – Looking for the perfect holiday present for a fitness fan? Gift offerings this year range from apps that can store a run in the country to be viewed later to gadgets so sophisticated they measure quality of sleep as well as calories burned.

There is also the revival of the humble foam roller, which experts say, like old-time push-ups, squats and planks, has never been more popular.

Anita Golden, fitness manager at a Crunch gym in New York City, said she’ll be giving clients a foam roller called the GRID.

“We’ve always had foam rollers in the club but now more people are using them as a way to ease post-workout muscles, prevent injuries and exercise the core,” Golden said.

When it comes to big-ticket items, Colleen Logan of Icon Health and Fitness, which manufactures a number of fitness brands, said the treadmill remains the most popular gift.

“Treadmills continue to lead the industry in terms of home fitness purchases,” said Logan.

They account for about 57 percent of fitness purchases, while elliptical trainers and stationary bicycles are a distant second and third place at about 8 percent each.

The average home treadmill costs about $ 700, said Logan, but the technology revolution has transformed even this stalwart at the high end.

The ultimate splurge, at $ 4,000, she said, is the Boston Marathon Treadmill, which allows users to adjust speed in 1/10 of a mile per hour increments without touching the console. It also lets users run a virtual Boston Marathon.

For people on a smaller budget, there is the iFit app that lets the iPhone capture a favorite vacation run or bike ride in Hawaii, store it in data centers all over the world which collectively are referred to as the “cloud,” and download it to an iFit-enabled treadmill at home.

“You’ll view the exact route and experience the same terrain again,” Logan explained.

Devices, gadgets and apps proliferate as tech-savvy fitness becomes more accessible, according to Jessica Matthews of the American Council on Exercise (ACE).

“There’s a lot of interest in on-body monitoring devices as ways to motivate and track progress,” she said. “They run the gamut from basic devices to track hours, steps, and caloric expenditure to full-body tracking.”

Nike+ Sportsband has a series of small lights on the wrist band that change from red to green as the runner nears his goal, while the BodyMedia FIT Armband tracks everything from the number of calories burned to the quality and quantity of sleep.

ACE also studied fitness DVDs released for the holidays.

“We evaluated them for quality of instruction, safety, effectiveness and design of workout,” Matthews said.

Among the best were “Amy Dixon’s Breathless Body Vol.2: The Edge.” Matthews called it a challenging cardio workout best suited to those on your list with “an established base of fitness.”

“Jessica Smith’s 10 Pounds Down Better Body Blast” also got a thumbs up for its well-rounded routine and clarity of instruction.

For people seeking a mind-body approach, Matthews praised “STOTT Pilates Intense Body Blast: Pilates Interval Training: Level I,” which she said is accessible for someone new to fitness.

“They do a great job queuing movements and creating flow,” she said.

Richard Cotton of the American College of Sports Medicine suggests giving the fitness novice the gift of a personal trainer.

“The best is human assistance,” he said. “Another way is a beginner group exercise class.”

He also suggests a gift certificate for shoes at a running store equipped with a treadmill.

“You need shoes that fit your gait,” he said. “People should always get their gait analyzed.”

Golden likes to cite the law of reciprocity to the personal trainers she manages.

“I always tell them to get their clients something,” she said.

And what does the personal trainer want for Christmas?

“I like the roller, or a new jump rope,” she said. “Fitness people aren’t hard to please. Get me a new yoga mat and I’m happy.”

(Reporting by Dorene Internicola; editing by Patricia Reaney)

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Letterman, Hoffman, Zeppelin honored by Obama

WASHINGTON (AP) — David Letterman‘s “stupid human tricks” and Top 10 lists vaulted into the ranks of cultural acclaim Sunday night as the late-night comedian received this year’s Kennedy Center Honors with rock band Led Zeppelin, an actor, a ballerina and a bluesman.

Stars from New York, Hollywood and the music world joined President Barack Obama at the White House on Sunday night to salute the honorees, whose ranks also include actor Dustin Hoffman, Chicago bluesman Buddy Guy and ballerina Natalia Makarova.

The honors are the nation’s highest award for those who influenced American culture through the arts. The recipients were later saluted by fellow performers at the Kennedy Center Opera House in a show to be broadcast Dec. 26 on CBS.

Obama drew laughs from his guests when he described the honorees as “some extraordinary people who have no business being on the same stage together.”

Noting that Guy made his first guitar strings using the wire from a window screen, he quipped, “That worked until his parents started wondering how all the mosquitoes were getting in.”

The president thanked the members of Led Zeppelin for behaving themselves at the White House given their history of “hotel rooms trashed and mayhem all around.”

Obama noted Letterman’s humble beginnings as an Indianapolis weatherman who once reported the city was being pelted by hail ‘the size of canned hams.’”

“It’s one of the highlights of his career,” he said.

All kidding aside, Obama described all of the honorees as artists who “inspired us to see things in a new way, to hear things differently, to discover something within us or to appreciate how much beauty there is in the world.”

“It’s that unique power that makes the arts so important,” he added.

Later on the red carpet, Letterman said he was thrilled by the recognition and to visit Obama at the White House.

“It supersedes everything, honestly,” he said. “I haven’t won that many awards.”

During the show, comedian Tina Fey said she grew up watching her mom laugh at Letterman as he brought on “an endless parade of weirdos.”

“Who was this Dave Letterman guy?” Fey said. “Was he a brilliant, subtle passive-aggressive parody of a talk show host? Or just some Midwestern goon who was a little bit off? Time has proven that there’s just really no way of knowing.”

Alec Baldwin offered a Top 10 reasons Letterman was winning the award, including the fact that he didn’t leave late night for a six-month stint in primetime — a not-so-subtle dig at rival Jay Leno.

Jimmy Kimmel, who will soon compete head-to-head with Letterman on ABC, said he fell in love with Letterman early in life and even had a “Late Night” cake on his 16th birthday.

“To me it wasn’t just a TV show,” Kimmel said. “It was the reason I would fail to make love to a live woman for many, many years.”

For Buddy Guy, singers Bonnie Raitt, Tracy Chapman and others got most of the crowd on its feet singing Guy’s signature “Sweet Home Chicago.”

Morgan Freeman hailed Guy as a pioneer who helped bridge soul and rock and roll.

“When you hear the blues, you really don’t think of it as black or white or yellow or purple or blue,” Freeman said. “Buddy Guy, your blue brought us together.”

Robert De Niro saluted Hoffman, saying he had changed acting, never took any shortcuts and was brave enough to be a perfectionist.

“Before Dustin burst on the scene, it was pretty much OK for movie stars to show up, read their lines and, if the director insisted, act a little,” De Niro said. “But then Dustin came along — and he just had to get everything right.”

By the end of the night, the Foo Fighters, Kid Rock and Lenny Kravitz got the crowd moving to some of Zeppelin’s hits at the Kennedy Center.

Jack Black declared Zeppelin the “greatest rock and roll band of all time.”

“That’s right. Better than the Beatles. Better than the Stones. Even better than Tenacious D,” he said. “And that’s not opinion — that’s fact.”

For the finale, Heart’s Ann Wilson and Nancy Wilson sang “Stairway to Heaven,” accompanied by a full choir and Jason Bonham, son of the late Zeppelin drummer John Bonham.

Zeppelin front man Robert Plant and his bandmates John Paul Jones and Jimmy Page seemed moved by the show.

Meryl Streep first introduced the honorees Saturday as they received the award medallions during a formal dinner at the U.S. State Department hosted by Secretary of State Hillary Rodham Clinton.

Clinton said ballerina Makarova “risked everything to have the freedom to dance the way she wanted to dance” when she defected from the Soviet Union in 1970.

Makarova made her debut with the American Ballet Theatre and later was the first exiled artist to return to the Soviet Union before its fall to dance with the Kirov Ballet.

Clinton also took special note of Letterman, saying he must be wondering what he’s doing in a crowd of talented artists and musicians.

“Dave and I have a history,” she said. “I have been a guest on his show several times, and if you include references to my pant suits, I’m on at least once a week.”

___

Follow Brett Zongker on Twitter at https://twitter.com/DCArtBeat

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Global firms’ tax pay ‘an insult’

3 December 2012 Last updated at 05:44 ET

Global firms in the UK that pay little or no tax are an “insult” to British businesses, a committee of MPs says.

Public Accounts Committee chairwoman Margaret Hodge said HM Revenue and Customs (HMRC) needed to be “more aggressive and assertive in confronting corporate tax avoidance”.

Multinationals such as Starbucks and Amazon have come under fire for paying little or no tax.

They generate UK sales of hundreds of millions of pounds.

Starbucks, for example, sold nearly £400m worth of goods in the UK last year, but paid no corporation tax at all, because much of the money it earns in this country is transferred to a sister company in the Netherlands in the form of royalty payments.

HMRC said it already ensured that international companies paid the tax due “in accordance with UK tax law”.

UK-based companies pay corporation tax on their taxable profits wherever they are made. Companies based outside the UK must pay tax on profits made in this country.

Continue reading the main story

Multinationals in the tax spotlight

Starbucks’ UK sales last year were £400m but much of its earnings are paid as royalties to another part of the company.

Amazon generated sales of more than £3.3bn in the UK last year but paid no corporation tax on any of the profits, and is under investigation by the UK tax authorities, according to the Guardian newspaper.

Apple paid less than 2% corporation tax on its profits outside the US, paying $ 713m (£445m) on foreign pre-tax profits of $ 36.8bn.

Google’s UK unit paid £6m to the Treasury in 2011 on UK turnover of £395m, according to the Telegraph newspaper.

Source: Various

The influential committee’s report comes after it took evidence in November from executives from Starbucks, Google and Amazon about the amount of corporation tax the companies have paid in the UK.

‘Evasive evidence’

Margaret Hodge told the BBC that there was a danger corporation tax was becoming “voluntary” and that this had to change.

“These global companies are making money in the UK. All we are saying is that if you have economic activities in the UK you are making profits and tax is payable on that,” she said.

It emerged on Sunday that coffee shop chain Starbucks is in talks with HMRC about the amount of tax it pays.

Meanwhile, Chancellor George Osborne will unveil later details of £154m of funding to help tackle tax avoidance and evasion, amid public concern over the tax affairs of major international companies and wealthy individuals.

Continue reading the main story

“Start Quote

Although they employ many thousands of people in Britain, it is unclear whether collectively they are net creators or destroyers of employment”

End Quote

The money will be used to take on extra staff to investigate high earners who aggressively avoid or evade paying tax and global firms that use legal loopholes to move profits out of the UK.

The funding is expected to help bring in about £2bn a year for HMRC.

In the report, Mrs Hodge said the level of tax taken from multinational firms with large UK operations was, “outrageous and an insult to British businesses and individuals who pay their fair share”.

Public Accounts Committee chairwoman Margaret Hodge: “It is time for HMRC to get a grip”.

“The inescapable conclusion is that multinationals are using structures and exploiting current tax legislation to move offshore profits that are clearly generated from economic activity in the UK.

“HMRC should be challenging this, but its response so far to these big businesses and their aggressive tax planning has lacked determination and looks way too lenient. Policing the tax system must be at the heart of what HMRC does.

An HMRC spokesman said: “We relentlessly challenge those that persist in avoiding tax and have recovered £29bn additional revenues from large businesses in the last six years, including £4.1bn in the last four years from transfer pricing enquiries alone.”

‘Breathtaking hypocrisy’

Continue reading the main story

Analysis

Jonty Bloom Business correspondent, BBC News

---

It is worth remembering that corporation tax is not the only tax that companies pay. Corporation tax does raise £50bn in the UK, but other taxes that cannot be avoided so easily include VAT; then there is the business rate, which raises some £25bn a year. The Institute for Economic Affairs says that is enough to pay for the secondary education system and the police and the fire service.

Also, companies pay National Insurance contributions for every worker they hire and fuel duty and vehicle excise duty which are one of the biggest revenue earners for the government.

That doesn’t mean that foreign companies aren’t doing their best to avoid paying corporation tax on the profits they make here, but then UK companies operating in France, China or the US are probably doing much the same there.

Laws on corporate taxation are extremely complex and often part of internationally negotiated treaties, one reason they are difficult to change and why companies have become very good at exploiting every legitimate and legal loophole that they can.

In a statement to coincide with the committee’s report, Amazon said it paid all applicable taxes in every jurisdiction that it operated in: “We have a single European headquarters in Luxembourg with hundreds of employees to manage this complex operation.”

Starbucks said in a statement: “We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more.

“As part of this we are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with the Treasury.”

‘Small fry’

The War on Want charity, which is campaigning for more to be done to tackle tax avoidance, accused the government of “breathtaking hypocrisy”.

It said: “Osborne and Cameron are happy to talk tough on tax. But, in reality, their plans will only go after the small fry on the fringes, while giving a green light to multinationals like Amazon, Google and Starbucks to continue avoiding billions in tax.”

Heather Self, a tax expert, told the BBC assessing tax for major companies was not simple.

“If you buy a book from Amazon you are actually buying from a Luxembourg company,” she said. “It decides how many books to buy and at what price they sell them for. All you have in the UK is a warehouse, a very big warehouse that employs a lot of people but that is all it does. The risk is taken in Luxembourg.

“Profits paid here are for the activities it undertakes here and that is not highly profitable. It is not as simple a situation as the Public Accounts Committee likes to make out sometimes.”

BBC News – Business

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Italy votes for center-left candidate for premier

ROME (AP) — Italians are choosing a center-left candidate for premier for elections early next year, an important primary runoff given the main party is ahead in the polls against a center-right camp in utter chaos over whether Silvio Berlusconi will run again.

Sunday’s runoff pits a veteran center-left leader, Pier Luigi Bersani, 61, against the 37-year-old mayor of Florence, Matteo Renzi, who has campaigned on an Obama-style “Let’s change Italy now” mantra.

Nearly all polls show Bersani winning the primary, after he won the first round of balloting Nov. 25 with 44.9 percent of the vote. Since he didn’t get an absolute majority, he was forced into a runoff with Renzi, who garnered 35.5 percent.

After battling all week to get more voters to the polling stations for round two, Renzi seemed almost resigned to a Bersani win by Sunday, saying he hoped that by Monday “we can all work together.”

Bersani, a former transport and industry minister, seemed confident of victory as well, joking about Berlusconi’s flip-flopping political ambitions by asking “What time did he say it?” when told that the media mogul had purportedly decided against running.

Next year’s general election will largely decide how and whether Italy continues on the path to financial health charted by Premier Mario Monti, appointed last year to save Italy from a Greek-style debt crisis.

The former European commissioner was named to head a technical government after international markets lost confidence in then-Premier Berlusconi’s ability to reign in Italy’s public debt and push through sorely needed structural reforms.

Berlusconi has largely stayed out of the public spotlight for the past year, but he returned with force in recent weeks, announcing he was thinking about running again, then changing his mind, then threatening to bring down Monti’s government, and most recently staying silent about his political plans.

His waffling has thrown his People of Freedom party into disarray and disrupted its own plans for a primary — all of which has only seemed to bolster the impression of order, stability and organization within the center-left camp.

A poll published Friday gave the Democratic Party 30 percent of the vote if the election were held now, compared with some 19.5 percent for the upstart populist movement of comic Beppe Grillo, and Berlusconi’s People of Freedom party in third with 14.3 percent. The poll, by the SWG firm for state-run RAI 3, surveyed 5,000 voting-age adults by telephone between Nov. 26 and 28. It had a margin of error of plus or minus 1.36 percentage points.

It’s quite a turnabout for Berlusconi’s once-dominant movement, and a similarly remarkable shift in fortunes for the Democratic Party, which had been in shambles for years, unable to capitalize on Berlusconi’s professional and personal failings while he was premier.

But Berlusconi’s 2011 downfall and a series of recent political party funding scandals that have targeted mostly center-right politicians have contributed to the party’s rise as Italy struggles through a grinding recession and near-record high unemployment.

Angelino Alfano, Berlusconi’s hand-picked political heir, seemed again exasperated Sunday after a long meeting with his patron over Berlusconi’s plans. News reports have suggested Berlusconi might split the party in two and re-launch the Forza Italia party that brought him to political power for the first time in 1994.

“We have to work to reconstruct the center-right, and reconstructing it means having a big center-right party,” not a divided one, Alfano said.

He added that Berlusconi didn’t say one way or another if he would run himself. “It’s his choice,” he said. “If there are any decisions in this regard, he’ll be the one to say so.”

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Follow Nicole Winfield at www.twitter.com/nwinfield

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