That’s what I think when I read that the European Union (EU)
and the International Monetary Fund (IMF) forced Cyprus to impose a one-off tax
on Cyprus bank depositors as a part of a bailout of its banks.
Like most countries in Europe,Cyprus '
banks are heavily exposed to the Greek debt crisis and now required a bailout. However the fact that the EU and the IMF required Cyprus to
impose a tax on people who saved money in their banks is a first. Since the Great
Depression, countries throughout the world had been on the warpath in
protecting banks and ensuring that there are no bank runs. Under the Cyprus bailout
terms, that had changed.
Like most countries in Europe,
Under the 10 billion euros bailout, people in Cyprus with
less than 100,000 euros in their accounts would have to pay a one-time tax of
6.75%. Those with sums over that would have to pay 9.9% in tax. Yes, a 10% tax
on people who had saved money!
Yet as people throughout Europe
and the world protested at the terms of the bailout, the devils are in the
details. You see, in some ways Cyprus is a lot like Singapore. For years, Cyprus found growth not through industry but as a tax haven for the rich. Although the Cypriots never admitted it, they are a tax haven. Rich wealthy individuals stored their money in Cypriot banks to escape taxed in their own countries.
So when Cyprus needed a bailout, I don't think there's any question that officials in the EU and the IMF were less than thrilled. They were probably asking themselves why in the world would they want to throw their money to save banks in a tax haven? I mean if you look at it from that point of view, even the idea of a bailout for Cyprus' banks is ludicrous.
Which was why they imposed this 9.9% tax on people with savings over $100,000!
The EU and the IMF do not want to bailout Cyprus. It makes sense that they don't want to. Cyprus is a tax haven which has an economy that is based almost entirely on getting tax evaders to park their money off-shore into their banks. Although mostly Russians, I have no doubt that tax evaders from various EU nations also parked their money in Cyprus. If you were an official in Brussels, Berlin or Paris, would you want to bailout Cyprus?
The answer to that question is an easy one. The Cyprus government has now postponed a vote on the bailout as they are no sure if they have enough votes in parliament to pass the deal. If they don't and the bailout terms are rejected, the biggest cheer you hear won't be from the Cypriot public. It will be from Brussels, Berlin and Paris.
So when Cyprus needed a bailout, I don't think there's any question that officials in the EU and the IMF were less than thrilled. They were probably asking themselves why in the world would they want to throw their money to save banks in a tax haven? I mean if you look at it from that point of view, even the idea of a bailout for Cyprus' banks is ludicrous.
Which was why they imposed this 9.9% tax on people with savings over $100,000!
The EU and the IMF do not want to bailout Cyprus. It makes sense that they don't want to. Cyprus is a tax haven which has an economy that is based almost entirely on getting tax evaders to park their money off-shore into their banks. Although mostly Russians, I have no doubt that tax evaders from various EU nations also parked their money in Cyprus. If you were an official in Brussels, Berlin or Paris, would you want to bailout Cyprus?
The answer to that question is an easy one. The Cyprus government has now postponed a vote on the bailout as they are no sure if they have enough votes in parliament to pass the deal. If they don't and the bailout terms are rejected, the biggest cheer you hear won't be from the Cypriot public. It will be from Brussels, Berlin and Paris.
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