Cyprus agrees 20% tax on bank deposits - Sunday, March 24, 2013

Politicians in Cyprus have reportedly agreed a new one-off levy on savers in order to secure a European bailout.

The measures, yet to be confirmed by the country's President, include a 20% tax on savers with deposits over 100,000 euros at the country's largest bank, the Bank of Cyprus.

A 4% tax on deposits over 100,000 euros would be levied at other banks, a senior Cypriot official told Reuters.

Cyprus has to raise 5.8bn euros by Monday or face being kicked out of the single currency.

Eurozone finance ministers are due to meet on Sunday evening to see if the numbers Cyprus has agreed with its international lenders add up.

Cypriot President Nicos Anastasiades tweeted: 'We are undertaking great efforts. I hope we have a solution soon.'

The conservative leader, barely a month into the job and wrestling with Cyprus's worst crisis since a 1974 invasion by Turkish forces split the island in two, was due to lead a delegation to Brussels, also on Sunday, to meet heads of the 'troika' - the EU, the European Central Bank and International Monetary Fund - in a sign a deal might be near.

Government officials held talks throughout Saturday at the finance ministry with troika lenders. Angry demonstrators outside chanted 'resign, resign!'

Its outsized banking sector crippled by exposure to crisis-hit Greece, Cyprus needs to raise the 5.8bn euros in exchange for a 10bn euro EU lifeline to keep the country's economy afloat.

But in a vote on Tuesday, Cyprus's 56-seat parliament rejected a levy on depositors, big and small, as 'bank robbery', and the country's finance minister Michael Sarris spent three fruitless days in Moscow trying to win help from Russia, whose citizens have billions of euros at stake in Cypriot banks.

Rebuffed by the Kremlin, Mr Sarris said earlier on Saturday that talks with the troika were centred on a possibly levy of up to 25% on savings over and above 100,000 euros at failing Bank of Cyprus.

However, the situation remains fluid and other options, including a 'voluntary haircut' in exchange for equity that would not require parliamentary approval, are said to still be on the table.

Ordinary Cypriots were outraged by the original proposal, and have been besieging cash machines ever since bank doors were closed last weekend on the orders of the government to avert a massive flight of capital.

http://bigpondnews.com/articles/Top...-3_Cyprusagrees20taxonbankdeposits_RSS_230313

 

What a disgrace! So it begins.

This will spread like a financial contagion now across the indebted euro zone countries.

 

When they say they need a "10bn euro EU lifeline to keep the country's economy afloat", does anyone know what they need it for?

If:
(1) to pay for a bunch of maturing bonds, then they presumably can default (just like the Greek banks did to them that contributed significantly to putting them in this mess) but keep deposits intact
(2) to pay for a continuation of the Government deficit, then presumably they can undertake a mixture of austerity/taxation/central bank printing measures faster than continuing on paying down 100% debt to GDP by 2020.
(3) for ???

I'm confused about what they really need the money for. Yes, (1) and (2) are both painful and bankruptcy of their major banks will suck arse for quite a while but what's causing it? :/

 

But it won't happen here? Will it?

 

It already has and still is. IMHO I don't believe Australian banks will tax depositors this way. It's too easy for the average person to work out and risk of public disorder is high. What they will/have/are doing is taxing borrowers rather than depositors, to recapitilise under capitalised banks. Rather than taxing all depositors 10% and risking riots, they foreclose on businesses and customers who are not in financial difficulties, have good cash flow and equity.

They can take the cash flow by charging 18% 'penalty' interest and take the equity by charging 100's of thousands of dollars in 'additional cost of foreclosure' costs when they eventually sell the asset. They can then tell the public that the customer was foreclosed on because they missed mortgage payments, so the public blames the customer and go about their business ... no riots, higher share prices, everyone's happy .. apart from the customer who lost everything and was not in any financial difficulty.

This is essentially why we had the 2012 CBA/Bankwest senate inquiry, to raise public awareness of how Australian banks are planning on 'doing a Cyprus' on us when GFC2 arrives.

 

Too slow in general, but a "great" option if you have an explicit or effective insurance agreement on the loans

 

Personally, in this case, I think you give the Australian public too much credit...a dumber, more lazier group you'd be hard pressed to find

 

Incredible what is happening! 20% on your deposits stolen at the stroke of a pen...man that beats the fears we have about PM confiscation...much easier to grab electronic cash.
Can't believe what is happening serious... Wonder what the extend of the capital flight will be as soon as the banks reopen!

 

They dead set need to default and send a message to all of those European banksters that they will not be messed with. They will return to prosperity much faster this way than bailing out banksters just for the sake of staying in a currency that will be dead in less than a decade anyway.

They will go through this when the Euro fails all together, why not have 3-5-7 years head start with a cheaper currency already up and running? One of their biggest incomes is tourism is it not? What would benefit them more than a place where Europeans can get massive bang for buck on an exchange basis?

 

.

 

Australia will never be in the same situation as Cyprus as we can just print our own currency, the main problem Cyprus faces now is it has to beg for Euros to be printed rather than being able to print at their own pace.

What ever problems Australia faces in the future with our Banking sector it will be solved by printing currency and Super taxes. Effectively we will be letting WA and the Savers bail out the rest of the Country through inflation and taxation.

 

It already has with the government grabbing super and inactive banks accounts. The excuse is because the accounts have been 'inactive' but this is just a soft excuse and a precursor of things to come. If things were so great financially in Australia they wouldnt resort to such desperate, scraping the bottom of the barrel measures.
The negative for what they are doing in Cyprus are bank runs, but they can prevent that by putting a daily withdrawal limit on Citizens funds.

 

They should pull an Iceland.

I am also sick of hearing about 'Russian Money Launderers' it such a weak justification. Cyprus and Russia have treaties which make it very easy for Russia to find and prosecute any of their citizens doing the wrong thing in Cyprus... it is basically the last place a dodgy oligarch is going to put their money. The Russians with money there are primarily small to medium businessmen/women and their families... as usual the small guys getting screwed.

 

That is why this site is great. We all know what is coming down the road we just don't know when....yet. We may have our differences on this site but the underlying theme is to be forewarned is to be forearmed. Keep stacking. We all now know that banks are not safe. We all need to work on our asset column and limit your liabilities.

I have been exploring another avenue of protection. Its called a sub rosa trust;

sub rosa is an old latin phrase meaning (sub) under & rosa (rose).
It refers to the times when confidential, covert or secret meetings
were conducted under a rose hanging from the ceiling, this indicated to all that it was a sub rose meeting.

How To Establish a SR Trust
A discretionary trust is established with the following features,
It provides for all the usual beneficiaries:
Primary Persons (Father + Mother) + all decendants and antecedents,
it includes: any company in which any beneficiary has an interest,
as an officer or as a shareholder, and
any other trust in which any family member or trust object is a beneficiary.
The Trustee provisions and changes need to be detailed carefully in the document.
Provisions would include two or more Appointors to ensure continuity.

Assets to be held in trust:
Non Income producing assets such as:
Gold, Gems, Rare Metals, works of Art, Coins etc.
Cash income saved after tax.

Life Preservation Items
Dry Food,Tinned Food, Preserved Food, Clean Water Resource.

Registration Requirements - None
Because the trust does not have any business or financial activities conducted,
It does not need to be registered for any of : Australian Business Number, Tax File Number, Pay As You Go Tax, or any other taxation provisions,
It is simply a Repository to hold items anticipated to retain value in the event of the
breakdown of a countries financial system.

The physical location of the items needs to also be Sub Rosa.



Kind Regards
non recourse

 

Not really much different at the end of the day though is it. Either they confiscate the savings in full view or do it via the stealth of inflation. Can kicking at its finest.

Not like I needed another reason to keep up the PM purchases but certainly another reason to make sure they stay off the radar as much as possible.

 

It is so secret that no one seems to have posted information about one on the internet

Seriously though. If you're holding gold then eventually the CGT laws will kick in when it divests which would presumably require TFNs etc to be registered and doing so 20-years after the trust acquired them - or more importantly - when the Govt comes a knocking asking whose gold that is at which point you fess up to the sub rosa trust - seems like it may be difficult. :/

If you're holding food/non-investment commodities then what is the reason for the trust? To protect these things from personal bankruptcy?

Edit: Possibly a topic worthy of a separate thread.

 

Levy's, taxes - nothing but plain, common "nicking" stuff. But what gets my goat is the extension of the term "haircut" from the investment field to cover savers. Lazy reporters who are too thick to call it what it is - theft.

Haircut? More like a good,old-fashioned "purse-cut" by a bunch of cut-throats!

 

So Monday morning is going to be hell for Cyprus tomorrow morning .... and the markets too huh?

 

Depends if the Cyprus government passes the bank levy. If they do, which is likely then the markets will rally and PM's will drop. It will be hell in Cyprus on Tuesday morning when the banks are meant to re-open for Cypriots, but as far as the rest of the world goes everything will be rainbows and unicorns again.

 

Hmmmm. Rainbowwwwwwws. Unicornnnnnnnns. Oh, man. This shit is great. You guys got great shit. Another toke???