California Declares ‘Fiscal Emergency’
Governor of California Arnold Schwarzenegger has declared a fiscal state of emergency.
The economy of the West Coast State which is the eighth largest in the world has a budget deficit of over £10 billion and Governor Schwarzenegger has warned that the State’s government could be out of cash by October.
He has also ordered all state employees to take three day unpaid leave a month in a bid to curb spending, this is on top of ordering 200,000 workers onto minimum wage.
A statement released on behalf of the Governor said:
"Without a budget in place that addresses our $19bn deficit, every day brings California closer to a fiscal meltdown," Mr Schwarzenegger said in a statement.”
Experts have said that even when a budget is agreed it could still take several weeks after that for it to through, until then state workers will be victim to a second term of “furlough Fridays” requiring them to take three out of four Fridays off work unpaid.
The Governors office added:
"Our cash situation leaves me no choice but to once again furlough state workers until the legislature produces a budget I can sign."
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Tax Avoidance Reform Due This Week
On the back of Vodafone agreeing to end a ten year dispute with HMRC over tax avoidance, sources at the FT say the Government will this week announced details of its avoidance reform.
An overhaul of the current system was announced at the emergency budget and is expected to be a source of contention for both sides.
The announcement will mainly affect larger companies but anyone who trades outside of the UK may need to take consultancy advice.
The full announcement which will be the first time companies see any details of the change is expected to be released tomorrow (Tuesday).
Today's announcement regarding Vodafone will also have implications on other companies that are locked in dispute with HMRC over a combined tax bill of around £2.2bn.
Although reform details should be available tomorrow it is not expected for any reform to take place until 2012, if it passed through both houses without any significant changes.
Small businesses could be caught in the middle of this bill due to overseas trading if after the announcement you are unsure whether or not your business will be at risk then contact a business or financial consultancy finder who will find help for you.
Croydon: An Accountants View
Croydon is a metropolitan centre to the south of London city. It is 9.5 miles south of Charing Cross. It is a modern vibrant area with a proud history.
The Number 1#: One of Croydon's Landmarks
Economy:
The area has a strong history in transport owing to its commercial past. Rail and underground operators, Southern, London over ground and First capital Connect are based and run their services in the area. The Town is close proximity to the UKs second busiest airport: Gatwick which lies to the south of the town.
Giving the good transport links, the town has a good logistics and distribution industry. The town also has a number of shops including large retail centres like The Whitgift Centre.
The most recent unemployment figures put Croydon's unemployment rate at 6.3% which is slightly lower than the average for the London area.
There are a wide range of accounting and financial services available in the town. The area itself is o0ne of the largest financial centres outside the city of London. Access to the big four is easy as they have a presence in the town and good transport links to the city.
Coalition Ponders Graduate Tax. Unversities need new business model
Business Secretary Dr Vince Cable has announced plans to introduce a tax for University Graduates.
The tax which will be levied on income earned once in employment is designed to try and make the higher education system “fairer for all” and would also replace the current top up scheme. The announcement came with the possibility of an increase is student tuition fees, something Dr Cable’s party the Liberal Democrats have always been opposed to until recently.
Dr Cable was speaking at a meeting to introduce a new “progressive” series of funding for the education system, his announcement of exchanging tuition fees for a tax has been met positively although many do believe that this sort of system is not completely fair as it may alienate students from a less wealthy back ground. Dr Cable however assured this was not the case saying:
“We don't want to narrow the opportunities for young people to go to university, so therefore the only possible way forward is by having a bigger graduate contribution. The issue then is how you do it fairly."
Any announcement or bill put forward by the Government will come in effect once the report into the education sector by Lord Browne is completed.
In the run up to this year’s election the Liberal Democrats scrapped their plans to abolish tuition fees but with many members still for free higher education the possibility of the Lb Dem MP’s being able to sit out this vote is a high possibility, leaving this in the hands of the Conservative Party.
Universities are major businesses, and urgently need to review their business strategic plan, and financial business model with a top accountant. Furthermore it would greatly benefit them if they sought external advice and brought in education business consultants to look at the strategic implications and to test any business model proposed by the university's accountants.