Panel: Raise local income taxes to offset property tax burden

By Virgin Mary Beth Schneider and Bill Ruthhart

A bipartizan legislative committee on Tuesday called for raising local income taxations to pay for place taxation relief, leading some local functionaries to fear the toughest political determinations are merely being shifted back to them.

Sen. Saint Luke Kenley, R-Noblesville, chairs the state Tax and Financing Policy Commission, whose suggestions were unanimous. - CHARLIE NYE / The Star

What's on the table Comparing Gov. Daniels' reform program and the state commission's proposals:Key concepts• DanielsCuts the norm homeowners' place taxation measure more than a third.Caps residential place taxations at 1 per centum of a home's assessed value, 2 percentage for rental places and 3 percentage for businesses.Increases the state gross gross sales taxation to 7 percentage from 6 percent.• CommissionCuts residential place taxations by 50 percentage and 25 percentage for rental properties.Calls for place taxation caps, but makes not stipulate what percentage of assessed value.Expands sales taxation to other services and/or additions it by less than 1 percent. Calls on counties to increase the local option income taxation to pay for place taxation relief.School impact• DanielsState takes over school operational support and transportation system system costs.New edifice undertakings subject to elector referendums.• CommissionState takes over operational funding, but not transportation costs.Schools would not be required to throw referendums on projects.Constitutionally speaking• DanielsPlaces specific place taxation caps into the state fundamental law for homes, rental places and businesses.• CommissionCalls for constitutional caps, but makes not stipulate amounts.

"A batch of county functionaries state that if (the state) desires to increase the income tax, then the state should just make it and not look for counties to make it," said Saint David Bottorff, executive manager director of the Association of Hoosier State Counties.

Bottorff said local functionaries are well aware that Capital Of Indiana Mayor Baronet Peterson was voted out of business office last hebdomad in portion because he pushed to raise local income taxes.This new plan, which the state Tax and Financing Policy Committee voted 5-0 to urge to the legislature, would cut homeowners' place taxation measures in one-half — and lease place and 2nd places by about 25 per centum — beginning with the place taxation measures owed in 2008.Under the plan, counties would be either mandated or given inducements to increase their local option income taxations by, in most cases, between 0.6 and 0.7.percentage points.In Marion County, the county's income taxation — currently 1.65 percentage — likely would necessitate to be raised by 0.8 to 0.9 percentage points in order to supply the 50-percent cut in place taxes.And to raise the $771 million needful to pay for the state assuming the cost of kid social welfare and schools' general funds, the committee recommended raising the state gross sales taxation by less than a penny and/or expanding it to services not covered by the tax. Sen. Saint Luke Kenley, the Noblesville Republican who is president of the commission, called the recommendations "a route map for the General Assembly."The committee said place taxations pay for local services and that local authorities should take some of the duty for those disbursals by raising income taxes.The commission's proposal travels additional than a program unveiled by Gov. Mitch Daniels in October. He called for cutting homeowners' place taxations by a third, paid for by a 1-percentage point addition in Indiana's 6 percentage gross sales tax.Other key differences: Daniels' program called for the riddance of all township and county tax assessors and for electors to O.K. of major edifice undertakings in a referendum; the committee called for retaining one elected county tax assessor who must ran into minimal educational standards, and for no referendums.Daniels praised the committee program in a statement released by his office. "It closely parallels my taxation alleviation program and back ups all of its cardinal principles," he said.Daniels' program and the commission's program phone call for the state fundamental law to be amended to crest place taxations to maintain them from rising again in the future.Daniels was specific, calling for homeowners' measures to be no more than than 1 percentage of their homes' assessed valuation, with rental place at 2 percentage and concerns at 3 percent. The committee was deliberately vague, saying that volition demand to be hammered out by the legislature."Some people privately were not certain it's a good thought to set (caps) into the constitution," Kenley said. Pat Kiely, president of the Hoosier State Manufacturers Association, said the commission's program "has some pretty large unreciprocated questions." Business, though, also have concerns about Daniels' proposal, particularly because business's place taxations are capped at a higher degree than homeowners'.The committee started meeting on a taxation program after a state-ordered reappraisal led to higher place taxation measures across the state. It heard 35 hours of public testimony over eight meetings. The proposal, said state Rep. Peggy Welch, D-Bloomington, showed: "We did hear. We did listen."

House halts tax hike, but Dems feud over how to cover shortfall

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(11-10) 04:00 Pacific Time American Capital --

House Democrats plunged Friday toward a hit between two of their most urgent political needs: to demo financial duty and to halt a immense taxation addition on 23 million middle- to upper-income taxpayers concentrated in Democratic fastnesses like the Bay Area.

The House narrowly passed, 216-193, an $80 billion measure that would hold for one twelvemonth the spreading of the option lower limit taxation - known as the AMT - along with other commissariat to assist low-income people and widen a research and development recognition for business.

Left alone, the option lower limit taxation could hit Bay Area families earning more than than $100,000 this year. That threshold could drop to about $75,000 or less depending on the figure of children in a household and the amount of the family's place taxes, mortgage involvement and other deductions.

Rep. Ellen Tauscher, D-Walnut Creek, said the taxation now hits 21,000 families in her 10th District, which covers parts of Contra Costa, Alameda, Solano and Capital Of California counties. Come April, 92,000 families could pay one thousands of dollars in higher taxations imposed by the option lower limit taxation if nil is done.

"We have got 23 million people at a class crossing thought there's no railroad train coming, and they're going to begin walking across in April and they're going to acquire whacked," Tauscher said.

That narrative is repeated in every Bay Area congressional district, where popular middle-class taxation deductions for such as things as high local and state taxations and dearly-won mortgages would be wiped out under a tax that United States Congress created in 1969 to nab 155 high-income people who had escaped income taxes. But United States Congress never indexed the option lower limit taxation for inflation, and it have hit greater and greater Numbers of taxpayers every year.

To stop up the bill's $80 billion in proposed lost revenue, House Democrats raised taxations on venture capitalists, hedgerow finances and other investing funds. Senate Democrats hatred the idea, setting up a clang even as clip is running out for holes to be made for the current year.

The trouble Democrats had in passing even a impermanent hole to the option lower limit taxation shows the much larger budget problems ahead when the Shrub disposal taxation cuts run out in 2010.

A full abrogation of the option lower limit taxation is estimated to be $800 billion. Extending the Shrub taxation cuts would open up a $3.5 trillion budget hole.

Democrats also have got discovered a new political demography: More and more than of their electors dwell in the upper ranges of the center class, concentrated along the seashores and in cities, while many Republican electors autumn into the lower-middle social class in the little metropolises and rural countries of the country's interior.

Democrats had to raise taxations on some people while lowering them on those hit with the option lower limit taxation to follow with the "pay-as-you-go" rule they imposed after winning their House majority. "Pay-go" is the benchmark of Democratic financial virtuousness in reaction to old age of Republican Party adoption for everything from the Republic Of Iraq warfare to Medicare drug benefits. It is critical for conservative Democrats who captured seating in Republican-favored districts by candidacy on financial responsibility. But it also set the political party in a budget vise.

"The Democratic Party is the political party of financial responsibility," House Speaker Nancy Pelosi of San Francisco declared. "This enables us ... to works a flag for financial responsibility, to works a flag for the center class, to works a flag for fight to maintain United States No. 1."

The statute law will not, however, go law. Eight conservative House Democrats voted "no," complaining that Pelosi was making them fall on their blades for a taxation addition that can't go through the Senate.

Senate Democrats are balking at determination offsetting taxation increases. New House Of York Sen. Chow Schumer opposed the taxation on Wall Street money managers, many of whom are large political campaign contributors. Silicon Valley venture capitalists, another beginning of political campaign funds, also are strongly opposed. Yet Senate Democrats have got not yet offered a manner to countervail the lost revenue.

"Sometimes hits are good," said Rep. Microphone Thompson, D-St. Helena, a member of his party's "Blue Dog" axis of 48 fiscally conservative members. "I was pretty repetitive we pay for it. I was one who led the complaint in the Way and Means Committee and among the Blue Dogs. So I desire to see this thing paid for."

Yet all the Democrats who opposed the measure were conservatives, most of them Blue Dogs. Rep. Jim Cooper, D-Tenn., argued to co-workers that the option lower limit taxation endangers only the top 20 percentage of taxpayers and warned that Democrats were getting hammered for proposing a taxation addition to pay for it. Peter Cooper headlined charts showing the option lower limit taxation impacts mostly people earning $100,000-$500,000 a twelvemonth with the question, "A Middle-Class Tax Cut?"

Mike Franc, caput of authorities dealings at the conservative Heritage Foundation and a former Republican Party House aide, said high-income taxpayers are increasingly concentrated in Democratic districts.

Franc establish that Pelosi's San Francisco territory have more than than than 43,700 taxpayers earning more than $200,000 a twelvemonth who register as a couple, or $100,000 if they register as an individual. House Republican leader Toilet Boehner's western Buckeye State district, by contrast, have only 7,000 such as households.

"For most of the people who are going to acquire angry about the tax, 4 out of 5 modern times it's going to be a Democrat getting the call," Franc said.

Even if Senate Democrats come up up with the money, they will be hard-pressed to defeat resistance from Republicans who take a firm stand that there is no demand to make so. Republicans and the White Person House reason that the lost gross from wiping out the option lower limit taxation is a fiction created by congressional budgeting because the taxation was never intended for people who might now be paying it. President Shrub promised to blackball the House bill.

Conservative House Democrats extracted a promise from Pelosi to throw firm.

"We have got to act, No. 1," Tauscher said. "No. 2, we have got got to pay for it, unlike our Republican colleagues, who have been Spenders with borrowed money."

Franc called the pay-go regulation "the beginning of political manhood" for conservative Democrats.

"They cannot afford, especially in their first twelvemonth in the majority, to relinquish this sacred regulation they campaigned on. That's radioactive for them because it's such a critical portion of their political identity."
Online resources
For a chart detailing the taxation deductions of the House bill:

E-mail Carolyn Lochhead at .

Tax Information and Help

Here's a speedy overview of a few of your free taxation aid options:

*The Internal Revenue Service Volunteer Income Tax Aid Program (VITA)

*The Tax Guidance for the Aged Program (TCE)

*Free taxation aid for Military force and their families

The VITA and TCE Programs are comprised of military volunteers who are trained to assist with your taxation concerns like Earned Income Tax Recognition (EITC), Recognition for the Aged and Child Tax Credit. If you measure up for any of these, or other particular credits, your VITA or TCE counsellor can allow you know. Besides aid with preparing your taxation return, most of these free taxation counsellors also offer electronic filing, also known as e-filing, of your taxations free of charge. If you take to use the e-filing method, you will have your taxation tax return in about one-half the clip required to procedure paper returns. Another manner to rush up bringing of your valuable taxation tax return is to take advantage of the direct sedimentation option. Funds are usually deposited into your depository financial institution business relationship within years versus hebdomads or even calendar months it can take for paper filing methods and mailed checks.

The VITA taxation aid programme is widely available to families with low to chair income levels. If your annual income is $39,000 or less, you automatically qualify. The VITA military volunteers are sponsored by local and national organisations and are certified to supply taxation aid and to set up basic taxation taxation returns in metropolises and communities across the country.

VITA is generally widely available in community centers, public libraries, public schools, malls, shopping centres and many other convenient locations to break function your tax needs. Most VITA locations offering free e-filing, sol experience free to take advantage of this fast, easy and dependable manner to rush up the readying and bringing of your taxation return. Call their toll-free number 1-800-829-1040 if you necessitate aid locating the nighest VITA site.

The TCE Program is widely available to the aged in demand of taxation help. If you are age 60 or older, you automatically measure up for the TCE Program's assistance. TCE military volunteers are usually retired people who are associated with a non-profit organization that have grants from the Internal Revenue Service to operate. These military volunteers are trained to supply free taxation aid and income taxation tax return information, readying and filing.

The American Association of Retired Persons (AARP) is portion of the TCE program, sponsored by the IRS. With nearly 7,500 Association for the Advancement of Retired Persons Tax-Aide land sites state wide, a certified Association for the Advancement of Retired Persons Tax-Aide military volunteer is readily available to assist you with all of your taxation aid and readying needs.

The VITA Program also have a very strong military presence. The Armed Forces Tax Council (AFTC) is comprised of programme coordinators for all subdivisions of the U.S. Military. The AFTC is the primary outreach transmission channel utilized by the Internal Revenue Service to link with the United States Military force and their families.

All taxation aid provided by VITA, TCE and TCE via the Association for the Advancement of Retired Persons is provided to you free of complaint if you qualify.

Here is a listing of points you necessitate to convey with you to have got got your taxations properly prepared:

*Wage and earning statements (for illustration W-2, W-2G, 1099-R)

*Photo Idaho Oregon other cogent evidence of identification

*Social Security card game for yourself and any dependents

*Birth days of the month for you and any dependents

*Interest and dividend statements you may have

*A transcript of the former year's Federal Soldier and State Returns

*Required information regarding twenty-four hours attention (for illustration sum paid for twenty-four hours attention disbursals and the taxation Idaho figure for your twenty-four hours attention provider)

If you be after to take advantage of e-filing or if you're married filing jointly, both partners must be available to subscribe the prepared taxation documents.

Property Taxes - A Quandry

According to the New York Times, real estate taxpayers in several states, including Florida and New Jersey, are looking for ways to reform the way those taxes are levied. The common complaint is that the amount levied and how it is determined is unfair, resulting in taxes that are too high. We all want services and government benefits but hate paying for them. Citizens complain to elected officials, who enact reforms and laws and, for the most part, make matters worse. Florida serves as a case in point.

There is no personal income tax in Florida so revenue that the state and localities collect is from sales taxes, real estate taxes and use fees. Fifteen years ago, people were complaining that they were being driven from their homes due to rising property taxes. The solution was the "Save Our Homes" amendment to the Florida state constitution which limited the annual amount that actual property taxes could increase to the CPI or 3%, whichever is less. This applied to residents who were living in their homes full time and had filed the necessary paperwork to qualify for the homestead exemption. Part time residents, businesses and renters could not take advantage of this provision.

Further, whenever there was a sale of a home, the new owner was assessed on approximately 75% of the price he/she paid. For example, if I buy 905 East 5th Street for $400,000, my taxes will be based on an assessed valuation of $300,000. If the mill rate is 1.3% then my real estate taxes for the year after I buy and take occupancy would be $3900. If I am a full time resident, then my taxes will be capped at that number with yearly increments of never more than 3%.

Several years go by, and 903 East 5th Street, a house identical to mine, is sold for $800,000. My new neighbors assessed valuation is will be $600,000. To allow for an ease in comparison, let's assume that there has been no increase in inflation or any need to raise the mill rate due to government spending. Under this scenario, I would be paying the same $3900 and my new neighbor would be paying $7800. But, if the owner of 903 East 5th Street is only a part time resident, he/she would also be ineligible for the cap. If, in several years, the market value goes to $1,000,000, he/she would now be paying on an assessed value of $750,000, resulting in taxes of $9750.

The "fix" did what it was intended to do. It did allow people to remain in their homes even when the home increased substantially in value because property taxes for those residents remained artificially low. The problems that the state is having now are directly attributable to the consequences of the "Save Our Homes" amendment. Existing residents, especially the elderly, are penalized for moving. If a couple who has owned a large home for many years decides to downsize to a smaller home or a condo, their new tax bill is likely to be higher than what they were paying for their larger home. This will occur because the property tax advantage for homesteaded Florida residents is not portable to their new home. The new property taxes will be based on 75% of the market value of the new residence and then capped going forward from the purchase date of that home. And, a young couple just starting out can't buy a house -- not because they can't afford a mortgage but because they cannot afford the real estate taxes.

Second home buyers are now looking in other states because they can no longer afford to have a part time Florida home that costs more than their full time residences to maintain. Businesses and renters are being forced to pay outrageous rents because of the inequitable way real estate taxes are calculated. Further, local governments have no incentives to limit spending since the amount of any increase spending is borne by the non-voting real estate owners.

The Florida governor and legislature are debating all types of complicated schemes and ideas to keep this system afloat. Swap the tax on homesteaded properties for an increase in the sales tax. Portability of the assessed amount from property to property in the state or within an existing county. Roll back local government spending to 2006 or 2004 or 2000 levels with percentage increases for the future. The politicians are proposing everything but a common sense solution.

Florida should once again begin assessing all property within the state by the value of the asset alone. Real estate taxes are supposed to be "ad valorem" taxes. This concept goes back thousands of years. Real estate is assessed and its value is taxed equally. It doesn't matter if the owner is old, young, rich or poor. The state could, however, provide some relief for low-income residents. For example, Florida could keep a $25,000 exemption for full time residents. This means that their assessed valuations would be reduced by $25,000. If you meet certain economic guidelines, you could receive further exemptions which would decrease the amount of tax owed. However, anything more than the initial exemption given to all residents should be needs tested -- not based on age or veteran status or being a widow. There are many wealthy widows, seniors and veterans that do not need the help.

While taxes certainly would rise for those in residence the longest, it will result in lower tax bills for the vast majority of real estate tax payers. Further, by making all voting residents fully responsible for the spending of their elected officials, government budgets will be more closely monitored.

Sometimes the easiest fixes are the best. Simplicity has its own rewards.

Online Tax Filing - How Do I Know It's For Me?

Online Tax Filing - How Do I Know It's For Me?

There are many benefits to filing your taxes online, especially speed. Filing online will allow you to get your tax refund in as little as 10 days. There are also numerous tax software programs that can help get you through the process of filing your return. You can file your 1040 tax form, plus with electronic tax filing, it's very low cost or even free. When it comes time to actually fill in all the boxes on a return to send to the IRS, one of the best tax filing tips is to use one of these tax perparation programs to keep track of everything. Developed for do-it-yourself taxpayers like you, these software programs prepare both your federal and state tax returns, often including FREE e-filing. Plus, they may offer the option of paying your online tax filing fee with PayPal, as well.

What's So Great About Filing Online?

Online filing eliminates the need for going through the tiring steps of rushing to the local IRS offices and post offices and waiting in never ending lines to mail the documents before the due date. Online tax filing has also reduced the time gap prior to receiving your tax refund, and papers can be printed on demand to maintain precise records for future reference. Online tax filing also facilitates tax payments using credit cards, which can give additional bonuses such as free travel points. Online income tax filing is generally free if individuals file tax returns themselves, and millions of people file taxes online each year. It's easy with so many online tax filing software applications to choose from. One statistic states that during the first quarter, nearly 39 percent of respondents to a survey said they planned to file their federal taxes online this year, up from 37 percent last year and approximately 28 percent three years ago.

What's This Free File Program All About?

The IRS has partnered with 19 tax software companies for what's called the Free File program. The Free File program is free for qualifying taxpayers to prepare and electronically file their federal income taxes. The software programs available to complete the returns are much easier to use than they used to be, and they can keep you from making simple mistakes. Such programs often include helpful tax-filing hints based on the information you enter, and most tax preparation software companies have updated their programs to account for the deductions and necessary notations that change every year. The costs of these tax filing programs vary, depending on what program you use, and many programs offer extra audit protection for a fee, though it's not quite the same as going to an accountant.

The Bottom Dollar About Electronic Tax Filing...

There are many free tax filing options available with varying eligibility requirements. Why not join the millions of people who have discovered how easy online tax filing can be? Instead of hiring an accountant, give online tax filing a try this year.

Canada's Flaherty Backtracks on Plan to End Corporate Tax Break

Canadian Finance Minister Jim Flaherty, pressured by companies such as Alcan Inc., backtracked on plans to scrap a corporate tax break valued at as much as C$2 billion ($1.81 billion) a year.

Flaherty told the Globe and Mail newspaper in an interview yesterday he'll narrow the scope of a pledge made in his 2007 budget to end companies' ability to deduct interest on debt that they incur to finance operations abroad.

Only companies investing through ``tax havens'' or limited- liability business structures will lose the deduction, Flaherty said, according to a transcript of the interview provided separately by the finance department. ``Most'' foreign transactions, including Thomson Corp.'s efforts to acquire Reuters Group Plc, won't be affected, he said.

``Clearly, they've addressed some important improvements,'' said Mike Murphy, executive vice president for policy at the Canadian Chamber of Commerce. The group wrote to Flaherty last month saying the tax change would cost businesses about C$2 billion annually.

Businesses said losing the right to deduct interest expenses would make it more costly to expand overseas, at a time when corporate Canada is facing a barrage of takeovers by foreign competitors. The initial proposal, part of what Flaherty says is a strategy to make corporations pay their ``fair'' share of taxes, also sparked the second clash in six months between his minority Conservative Party government and key supporters.

Overshadowed

In October, the government announced plans to tax the nation's income trusts, causing the popular, high-yield investments' value to plummet.

``This Conservative government has to make sure it doesn't convey an image that it's not pro-business,'' said Nikita Nanos, a pollster with SES Research in Ottawa. ``It undermines part of the core franchise,'' he said. ``It's going to make people question, `What's going on?'''

Flaherty, 57, also told the Globe and Mail he will extend a planned two-year grace period to five years and appoint a panel that will look at international tax issues for Canadian businesses for future budgets. Details of the plan will be released Monday in a speech to the Toronto Board of Trade.

Boost Its Fortunes

The controversy overshadowed a budget designed to boost the Conservative Party's fortunes -- ahead of a possible election later this year -- through tax breaks for families and more funding for the French-speaking province of Quebec. The party's support hasn't moved much since Flaherty released his fiscal plan on March 19, with recent polls showing Prime Minister Stephen Harper's government still wouldn't win a majority of parliamentary seats.

Opposition parties' attacks on the measure got new life this week when Alcoa Inc. said it will make a $26.9 billion takeover bid for Montreal-based Alcan, Canada's 10th-largest public company and biggest metals producer. The offer came less than two weeks after Alcan Chief Executive Officer Dick Evans told the Globe and Mail newspaper that Flaherty's tax proposal would make the company easier for foreign rivals to acquire.

The main opposition Liberal Party introduced a motion on May 10 calling on the government to repeal the tax measure.

The last significant budget reversal by a Canadian finance minister came in 2004, when Ralph Goodale repealed a decision to limit investments by pension funds in investment trusts.

To contact the reporter on this story: Theophilos Argitis in Ottawa at
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Softbank Default Swaps May Drop, Morgan Stanley Says (Update2)

Investors may make more bets on the
improving finances of Softbank Corp., Japan's third-largest
mobile-phone company, by selling credit-default swaps, Morgan
Stanley Japan Securities Co. said.

Sellers of the derivatives, which provide buyers with
protection from a firm's inability to repay debt, are attracted
by a price that overstates the chance Softbank will fail to meet
its obligations, said Hidetoshi Ohashi, a Morgan Stanley credit
analyst in Tokyo. The extra yield investors demand to hold
Softbank bonds over Japanese swap rates has halved in the past
year. Spreads on Softbank credit-default swaps fell by a quarter.

Softbank said on May 8 its fourth-quarter operating profit
more than doubled, helping allay concern that it would be unable
to repay loans that funded its 1.66 trillion yen ($13.8 billion)
acquisition of Vodafone Group Plc's Japanese mobile-phone unit.
The purchase in April last year extended billionaire Masayoshi
Son's challenge to market leaders NTT DoCoMo Inc. and KDDI Corp.

``The company's earnings showed the mobile phone businesses
are doing better than anticipated,'' said Ohashi, the third-
highest-ranked credit analyst in Japan, according to a survey by
Nikkei Bonds and Financial Weekly. ``Investors are selling
Softbank CDS to earn income because cash bonds are expensive
relative to the CDS premium.''

Narrowing Spreads

Credit-default swaps based on 1 billion yen of Softbank debt
closed in Japan at 25.8 million yen from 26.3 million yen
yesterday, according to prices from JPMorgan Chase & Co. Trading
volume today between dealers was about 8 billion yen, more than
five times the normal daily amount, said Mana Nakazora, chief
credit analyst at JPMorgan Securities Japan in Tokyo.

The cost of the contracts was as much as 39.6 million yen
in March 2006, the highest since Bloomberg began tracking the
contracts in February 2005. Sellers of the five-year contracts
receive quarterly payments because they agree to pay buyers the
face value of the notes in a default in exchange for the
underlying securities.

The cost of the five-year contracts is equivalent to 258
basis points, or 2.58 percent of the amount protected. The cost
may fall below 200 basis points in the next six to 12 months,
Morgan Stanley's Ohashi said.

The yield spread between the company's 40 billion yen in
1.98 percent bonds due in September 2010 and similar-maturity
swap rates narrowed to 166 basis points yesterday, from 333 basis
points a year earlier, according to data compiled by Bloomberg.

Operating profit rose to 73.8 billion yen in the three
months ended March 31 from 34.4 billion yen, and sales more than
doubled to 721.9 billion yen, Tokyo-based Softbank said on May 8.

BBB Rating

Softbank's debt carries a BBB ranking from Japan Credit
Rating Agency, the second-lowest investment grade. Moody's
Investors Service and Standard & Poor's assign the company high-
risk, high-yield ratings of Ba2 and BB-, respectively.

``The earnings showed that Softbank's risk is equivalent to
a BBB rating,'' Ohashi said. ``People paid too much of a premium
to compensate for Softbank's risk.''

Shares of Softbank yesterday fell the most in almost two
months as UBS Securities Japan Ltd. recommended selling the stock
after fourth-quarter net income slid 83 percent. The shares,
which declined 3.2 percent yesterday, dropped another 0.8 percent
today to 2,595 yen.

Excluding gains from the former Vodafone subsidiary,
operating profit would have declined, UBS analysts Makio Inui and
Kei Takahashi wrote in the May 8 report. The focus on the mobile-
phone unit ``led to some stagnation'' in other businesses such as
fixed lines, the analysts said.

Softbank has the worst financial health in Japan among 129
companies tracked by Morgan Stanley, credit-default swaps show.
The company said it booked taxes of 60.4 billion yen, partly
because of goodwill relating to the Vodafone purchase.

`Good Overall'

The telecommunications group is betting it can add to its 17
percent share of Japan's $75 billion mobile-phone market by
offering lower subscription fees than rivals. Growth in the
number of subscribers, which rose a net 163,600 to 16.1 million
in April, may help the company offset declines in per-user
revenue.

The chance of Softbank failing to meet its debt obligations
within the next five years has declined to 21 percent from 28
percent last year, based on a JPMorgan Chase & Co. valuation
model that takes into account swap prices.

``Softbank's earnings looked good overall,'' said Kiyotoshi
Yasuda, chief risk manager of the credit trading department at
JPMorgan Securities Japan Co. in Tokyo. ``Softbank credit-default
swaps showed little reaction to the announcement because the
market has already priced in an increase in sales.''

Credit-default swaps are the fastest-growing part of the
$370 trillion global derivatives market. They allow investors to
speculate on shifts in a company's credit quality without paying
money up front, as would be required when buying bonds.

To contact the reporters on this story:
Keiko Ujikane in Tokyo at

Oliver Biggadike in Tokyo at
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Alma tourism committee tables proposed lodging tax

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A proposed 5 percent lodging tax on bed and breakfast and motel rooms in Alma was tabled after business owners opposed it.But the Alma Parks and Recreation Committee said the business community needed to work together with the city council to help the city attract tourists.A room tax was viewed as a method of raising revenue from tourists to help pay for upkeep of parks and public recreation services.The city council says it is spending too much compared to other small cities. Most of the money comes from property taxes.Peggy Jost, owner of the Hillcrest Motel in Alma, said she received a “mixed response” from business owners she approached about giving donations to the city as an alternative to the tax.Jost said a room tax would drive away visitors. She said guests would look for lodging elsewhere.She said several people told her it is the city’s obligation to have money set aside for maintenance of parks and recreation.Some suggested Alma charge a citywide sales tax, but City Administrator Linda Torgerson said Wisconsin law doesn’t allow a small city to impose a municipal sales tax.The only alternative tax available to the city for raising revenue to help support tourism is a room tax.The law provides that a majority of room tax revenue must be used for tourism-related promotions, Torgerson said.Alma Mayor Lois Balk and city Alderman Larry Farl, a local business owner, said a change in mindset would be necessary if the city and businesses were going to do a better job of working together to solve funding problems.Farl said the Alma Chamber of Commerce and businesses might have to do more to improve fundraising activities in cooperation with the city to help fund local tourism.Balk recommended the community talk about tourism and come up with new ideas for raising revenue.
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