Thursday, January 21, 2010

“Reduce personal Income-tax (Central Chronicle)” plus 3 more

“Reduce personal Income-tax (Central Chronicle)” plus 3 more


Reduce personal Income-tax (Central Chronicle)

Posted: 21 Jan 2010 06:26 AM PST

Rising prices, growing Central Government deficit and fall in personal Income-Tax collection are grim indicators of the difficult days ahead. The UPA government is also under pressure to have a re-look at the personal Income Tax rates. The stimulus has boosted corporate profits. The individual has suffered erosion in terms of job losses, wage cuts and by contributing far less to the government kitty. Now, it is their turn to get a stimulus through a cut in Income-tax rates.
It has been an effort on the part of the government to project each of these as unrelated events. The recent Union Cabinet meeting has not taken any concrete step to bring down the prices. Rhetoric of requesting the states would not reduce these. It requires a political will and a firm action plan. The government has merely tweaked the ears of a minister, who is promoting the interests of the sugar and foodgrain lobby he represents. It is not easy to understand why such a person is not thrown out. Such an action would help reinforce the faith of the people in the system.
There is little effort at managing the supply side problems. No proposal has come up from the Cabinet for reinforcing the distribution of food items. Apathy is evident in creating a parallel intervening system to keep the market in check. The government can claim that a system exists for those below the poverty line. But as per government statistics not more than one-third of the poor are covered by it. If discrepancies in poverty estimates are taken into account it would include about 60 per cent of the population.
The way the prices continue to rise, the salaried middle-class is too getting closer to the poverty line. This apart, even industry leaders have impressed upon the government to take steps to reduce food prices. High prices affect disposal income - spare money - of the people and leads to reduction in demand for manufactured goods. It affects the health of the industry on various counts - higher wages, higher costs, consequent higher prices of products and lower profit margins. Sadly, the Cabinet has not taken note of the precarious situation.
This despite that it also affects government finances. A review of the April-September 2009 finances of Central government indicates that all the key deficit indicators widened significantly over the corresponding period of the previous year, Division of Central Finances (DCF) of Reserve Bank says. Growth in receipt declined due to decline in tax revenue. Excise duty collection alone reduced by 22.9 per cent as against an increase of 6.6 per cent the previous year.
The DCF has expressed a grim view about the way the government is financing its expenses. These are coming from the dividend and public transfers from the government-owned finance institutions. It means the dividend that should have gone to create infrastructure and strengthen the public sector enterprises is being utilized to meet government expenses. Public transfers are borrowings. The government has raised Rs 58,802 crore from these two sources.
Notably, the government's expenditure has risen to Rs 448,848 crore-- a growth of 23.6 per cent. Most of it has come from market borrowings, says the DCF. As on November 23, the government had borrowed Rs 406,369 crore - 82.8 per cent of budget estimates (BE) as against Rs 163,904 core in (47.8 per cent of BE) in 2008-09. It simply means that the entire corporate stimulus package, which has not benefited the common man, is funded by raising debt.
Another concern is the deceleration in plan expenditure. It rose by only 15 per cent against 31 per cent a year back. If inflation figures are taken into account actual raise in allocation is far lower. It is certain to impact the developmental aspects and affect the people at large.
That the common man is losing is testified by the personal income-tax figures, which have come down by 19.7 per cent to Rs 13,117 crore from 16,345 in the same period last year. The government has yet not come out with a strategy to help the individual tax payer. High inflation is eroding his earning and high taxes are leaving little with him for spending. Unless he spends there would not be a real revival of the economy. Panacea suggested by corporate leaders to the government to borrow more and disinvest public sector companies is clearly not the solution.
Government expenditure is maintaining a rising momentum. This puts it in a catch 22 situation. If it does not spend then progress is hit. If it does not give relief to the individual tax payer - rate cut of income-tax rates - there would be no boost to the market spending. In addition, it can not raise other taxes because these too would have detrimental effect.
The growth of loans by banks has been slow despite the huge liquidity with the banks. Non-food credit - borrowings by industry and others for productive purposes - grew by 11 per cent year on year as on December 4 as against 26.3 per cent in the same period in 2008. According to the Reserve Bank of India weekly statistical supplement the total bank credit year-on-year as on December 4, 2009, was Rs 2,77,479 crore compared to Rs 6,27,529 crore on Dec. 4, 2009. Against this the deposits increased to Rs 6, 61,064 crore in 2009 over Rs 6, 27,529 crore in 2008. This indicates that the stimulus is not benefiting the economy, but is boosting individual corporate profits. The government needs to reconsider its decision.
It also has to take stern steps, just not cosmetic rhetoric, to control the prices. High prices again benefit some corporates but the economy is suffering. It has to act with short-term and long-term strategies. In the former it has to rejuvenate the PDS, so that the market knows that the people have an alternative to meet their needs. In the long-run, the government has to have a pragmatic agriculture policy, where both the market and government would have a role to play. So far all strategies are half-hearted and that the government appears to be on "daily wages".
The government's dilly-dallying attitude does not suggest there would be any relief either from high prices or other malaise. Growth is not real. It is more propaganda. The nation is in abyss and must be prepared for far more difficult days.
Shivaji Sarkar, -INFA

 


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Personal Finance I, Taxes Feature Release (Business Wire via Yahoo! Finance)

Posted: 21 Jan 2010 12:01 PM PST

SAN FRANCISCO--(BUSINESS WIRE)--The following release focuses on the topic Personal Finance I, Taxes:

ALL TIME-OFFS ARE IN EASTERN TIME, UNLESS NOTED STORIES MOVED AT 4:35 AM ET ON JANUARY 21, 2010.

Taxes, Refinancing and Mortgage Modification: Four Useful Tips Source: We Save Homes, Inc.

The following knowledgeable industry leader and scholar from Business Wire's ExpertSource database is available to discuss topics relating to Personal Finance I, Taxes

Bruce Cornelius, CreditReport.com

Former exec with Countrywide, Ditech, Fannie Mae and Freddie Mac. Bruce Cornelius now advises consumers on how to improve and manage their credit scores.

Bruce Cornelius brings more than 20 years of award-winning Web marketing and financial services business development achievements to CreditReport.com. He has held executive management positions with GMAC/Ditech, Countrywide Home Loans, Realtor.com, Fannie Mae, Freddie Mac, and Dun & Bradstreet. He is a recognized leader in producing award-winning financial services websites and launching e-commerce products and services. Prior to joining CreditReport.com, Cornelius provided strategic consulting and advisory services to early stage and emerging growth companies such as Virgin Money USA. Cornelius holds a B.S. in Finance and Economics from Boston College. He is a recent recipient of the Market Bridge Award having been recognized for his work using Web-based technologies to bridge the gap between consumers and financial institutions.

PR Contact: Paula Brici, paula@madisonalexanderpr.com, 949-677-6527

Registered journalists can submit queries to the ExpertSource staff and/or search for more experts in this and various other topics by going to www.businesswire.com and logging in with your email address and PressPass password. If you are not registered, you may do so at www.businesswire.com. For more information or assistance with ExpertSource, please contact Stacey Frank, ExpertSource Coordinator/Business Wire at 312/223-1037, stacey.frank@businesswire.com.

The following are upcoming Features Package release dates:

Questions? Contact Business Wire's Media Relations team at media.relations@businesswire.com or features@businesswire.com.

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Jury still out on lawsuit loans (Las Vegas Business Press)

Posted: 20 Jan 2010 05:32 PM PST

Jury still out on lawsuit loans

State Bar of Nevada sends mixed messages on subject

A car, house, or stocks and bonds are typically what's thought of as appropriate collateral for loans. Much to the chagrin of the State Bar of Nevada, however, the ubiquitous car accident lawsuit and other types of civil litigation can be used as financial instruments as well. This once little-known practice is gaining in popularity, too.

Lawsuit financing, also called settlement loans, allow plaintiffs in legal disputes to get cash advances based on the likelihood of a future settlement. About a half dozen companies offer lawsuit financing in Nevada.

Preferred Capital Lending is owned by former defense attorney Brian Garelli. The Chicago-based company started providing settlement financing in Illinois in 1998. Preferred opened its Las Vegas office three years ago, and is licensed to do "installment loans" by Nevada's Department of Business and Industry. Nationwide, Garelli made loans on about 10,000 legal cases last year, even before some became lawsuits. About 90 percent of the loans are made on auto accidents, workers compensation, medical malpractice and other injury cases. A smaller portion of the loans involved trademark infringement, mechanics liens and other commercial litigation.

Business is up 20 percent in Nevada and in four other states -- Illinois, Ohio, Utah and Missouri -- where Preferred operates. Garelli credits the jump to cash-strapped people struggling to save their homes in states like Nevada, and to increased support in the legal community.

"There are hundred of attorneys in Nevada who refer clients to me," he said. "I think a lot of lawyers are a lot more accepting of the lenders now."

Attorney Glen Howard said he doesn't refer clients to any one company, but will give clients information.

"I give them the options of different places and tell them to be very careful who you are dealing with. ... They have to look up the information on the Internet," he said.

The cautious attitude on the part of some attorneys likely stems from the conflicting messages coming from the State Bar on the subject. Initially, a State Bar ethics committee opinion said the practice of Nevada lawyers' referring clients to third-party lenders was acceptable. However, the State Bar Counsel, which enforces the rules, has since come out against lawyers referring clients' to settlement lenders.

Such a referral would run afoul of the State Bar's rules. Those prohibit lawyers from having others do things for their clients if the attorneys themselves are not allowed to. And lawyers are not allowed to financially assist their clients, said State Bar Assistant Bar Counsel Phil Pattee.

In the event a client gets a loan against their settlement on their own, the lawyer is still required to honor the lien on the case. The State Bar has not received any complaints from clients involving such settlement loans.

The contradicting stances might have confused lawyers, Pattee said.

"If some attorney said they were acting on this (ethics committee ruling) in good faith, we might have trouble pursuing them."

Preferred Capital charges interest rates in the "upper 30s" and assesses no fees. That is reasonable by hard-money, high-risk loan standards, Garelli said. He claims some of his unlicensed competitors have been known to charge interest as high as 180 percent.

"They avoid licensing by saying they are doing 'advances.' "

Other settlement loan companies contacted did not respond to request for comment. The Department of Business and Industry had no complaints on record against its licensees.

Some lawyers and clients admitted to being leery of many lawsuit lenders. They considered Preferred one of the reputable companies.

"I called a couple other places and they didn't sound good, and my lawyer referred me to (Preferred Capital)," said Renee Locke, a customer of the Las Vegas Preferred Capital Lending office.

Locke spent more than 30 years as a casino dealer before being disabled by an on-the-job injury two years ago. She has been fighting for a workers compensation settlement since and scraping to get by, she said.

"I am on disability and it is hard to get banks to lend me money," Locke said. She has now taken out five loans. The former dealer also turns to payday lenders, but says her overall experience was better at Preferred.

"They were so nice to me, and they didn't try to take a lot of my money," she said. "Sometimes I'd ask for $3,000 and they'd just give me $1,500. And I don't have to pay it back until my case is done."

Typically, the newer the case, the smaller the loan amount, Garelli said. He likes to keep loans to 10 percent or less of the total estimated value of the case.

Longtime personal injury attorney Ed Bernstein is opposed to settlement loans. He will try to talk his clients out of leveraging their settlements for cash advances.

"If a client took out a loan for $20,000 on a $100,000 case, in a few years after interest and fees, the client owes $100,000," he said. "Where's the incentive to show up in court when you have to pay that $100,000 back to someone else?"

Contact reporter Valerie Miller at vmiller @lvbusinesspress.com or 702-387-5286.

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EZCORP 1Q profit rises 73 percent (AP via Yahoo! Finance)

Posted: 21 Jan 2010 02:39 PM PST

AUSTIN, Texas (AP) -- EZCORP Inc. said Thursday its fiscal first-quarter profit rose 73 percent on higher revenue driven by demand for pawn shop loans.

Looking ahead, its CEO said second-quarter profit would be below Wall Street expectations but predicted that 2010 profit would beat the Street view.

The company reported profit of $25.7 million, or 52 cents per share, in the quarter that ended Dec. 31. That is up from the $14.8 million, or 33 cents per share, it earned a year earlier.

The quarterly profit beat a 42 cent per share prediction of analysts polled by Thomson Reuters. Analysts usually exclude one-time items.

Revenue rose 44 percent to $184.8 million from $128.6 million. Analysts had expected $160 million.

CEO Joe Rotunda said there was strong demand for loans in all the company's businesses.

He predicted second-quarter profit would be 43 cents per share, lower than the 44 cent per share estimate from Wall Street. And Rotunda said the company expects 2010 profit of $1.81 per share, which is higher than the $1.69 per share analysts expect.

EZCORP operates pawn shops that make short-term loans to people who offer personal property as collateral. It is based in Austin, Texas.

The stock rose 45 cents, or 2.5 percent, to $18.70 in after-hours trading Thursday, after closing the regular session up 14 cents at $18.25.

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