March 17, 2013

THERE'S ONLY ONE SAFE HAVEN:

Facing Bailout Tax, Cypriots Try to Get Cash Out of Banks (LIZ ALDERMAN, 3/17/13, NY Times)

Under an emergency deal reached early Saturday in Brussels, a one-time tax of 9.9 percent is to be levied on Cypriot bank deposits of more than 100,000 euros effective Tuesday, hitting wealthy depositors -- mostly Russians who have put vast sums into Cyprus's banks in recent years. But even deposits under that amount are to be taxed at 6.75 percent, meaning that Cyprus's creditors will be confiscating money directly from pensioners, workers and regular depositors to pay off the bailout tab.

Cyprus's newly elected president, Nicos Anastasiades, said taxing depositors would allow Cyprus to avoid implementing harsher austerity measures, including pension cuts and tax increases, of the type that have wreaked havoc in neighboring Greece. That thinking appealed to some Cypriots, including Stala Georgoudi, 56. "A one-time thing would be better than worse measures," she said. "Procrastinating and beating around the bush would be worse."

But Sharon Bowles, a British member of the European Parliament who is the head of the body's influential Economic and Monetary Affairs Committee, said the accord amounted to a "grabbing of ordinary depositors' money," billed as a tax.

"What the deal reflects is that being an unsecured or even secured depositor in euro-area banks is not as safe as it used to be," said Jacob Kirkegaard, an economist and European specialist at the Peterson Institute for International Economics in Washington. 

Posted by at March 17, 2013 6:50 AM
  

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