Athens negotiates over Greek property taxWith recession worsening, higher taxes are another key issue The highly controversial property tax, introduced in 2011 and slapped on households through electricity bills, has elicited particular opprobrium, so much so that the conservative-dominated coalition promised to slash the EU-IMF mandated measure after assuming power in June 2012. Hit by successive rounds of pay and pension cuts and a barrage of other duties, more and more Greeks, who have seen their disposable income drop by as much as 50% in the last two years, say even if they wanted to, they can no longer afford to pay the tax. Growing numbers, who have inherited properties, say they are caught between a rock and a hard place: unable to sell properties in a depressed market but also unable to pay the duties now slapped on them. The emergency measure raises approximately €3bn a year - vital to revenues. Under immense popular pressure, prime minister Antonis Samaras' fragile coalition has attempted to persuade troika technocrats that it can raise the money if the tax is merged with other property duties. Mission chiefs and the German Governor of Greece - Horst Reichenbach from the EC, ECB and IMF, however, have not been convinced, citing the innate weaknesses of Greece's infamously leaky tax collection system. Insiders worry that if the government is seen to lose yet another battle in the tug and pull of negotiations, it could suffer a potentially fatal PR communications defeat. The fiercely anti-bailout political opposition has stepped up criticism of the government saying it is already reneging on its promises.
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Sunday, March 17, 2013
Athens negotiates over Greek property taxWith recession worsening, higher taxes are another key issue The highly controversial property tax, introduced in 2011 and slapped on households through electricity bills, has elicited particular opprobrium, so much so that the conservative-dominated coalition promised to slash the EU-IMF mandated measure after assuming power in June 2012. Hit by successive rounds of pay and pension cuts and a barrage of other duties, more and more Greeks, who have seen their disposable income drop by as much as 50% in the last two years, say even if they wanted to, they can no longer afford to pay the tax. Growing numbers, who have inherited properties, say they are caught between a rock and a hard place: unable to sell properties in a depressed market but also unable to pay the duties now slapped on them. The emergency measure raises approximately €3bn a year - vital to revenues. Under immense popular pressure, prime minister Antonis Samaras' fragile coalition has attempted to persuade troika technocrats that it can raise the money if the tax is merged with other property duties. Mission chiefs and the German Governor of Greece - Horst Reichenbach from the EC, ECB and IMF, however, have not been convinced, citing the innate weaknesses of Greece's infamously leaky tax collection system. Insiders worry that if the government is seen to lose yet another battle in the tug and pull of negotiations, it could suffer a potentially fatal PR communications defeat. The fiercely anti-bailout political opposition has stepped up criticism of the government saying it is already reneging on its promises.
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Cypriots reacted with shock that turned to panic on Saturday after a 10% one-off levy on savings was forced on them as part of an extraordinary 10bn euro (£8.7bn) bailout agreed in Brussels.
People rushed to banks and queued at cash machines that refused to release cash as resentment quickly set in. The savers, half of whom are thought to be non-resident Russians, will raise almost €6bn thanks to a deal reached by European partners and the International Monetary Fund (IMF). It is the first time a bailout has included such a measure and Cyprus is the fifth country after Greece, the Republic of Ireland, Portugal and Spain to turn to the eurozone for financial help during the region's debt crisis. The move in the eurozone's third smallest economy could have repercussions for financially overstretched bigger economies such as Spain and Italy.
People with less than 100,000 euros in their accounts will have to pay a one-time tax of 6.75%, Eurozone officials said, while those with greater sums will lose 9.9%. Without a rescue, president Nicos Anastasiades said Cyprus would default and threaten to unravel investor confidence in the eurozone. The Cypriot leader, who was elected last month on a promise to tackle the country's debt crisis, will make a statement to the nation on Sunday.
The prospect of savings being so savagely docked sparked terror among the island's resident British community. At the Anglican Church's weekly Saturday thrift shop gathering in Nicosia, Cyprus's war-divided capital, ex-pats expressed alarm with many saying that they had also rushed to ATMs to withdraw money from their accounts. "There's a run on banks. A lot of us are really panicking. The big fear is that there soon won't be cash in ATMs," said Arlene Skillett, a resident in Nicosia. "People are worried that they're automatically going to lose ten present [of their savings] in deposit accounts. Anastasiades won elections saying he wouldn't allow this to happen."
She said a lot of elderly Britons had transferred savings to the island when they had decided to retire there. "Nobody can understand how they can do this – isn't it illegal? How can they just dock money from your account?" she asked.
Do you have any idea what you're talking about? It was the left-wing leader who refused to allow the Troika to get away with this, and the newly-elected right-winger who has agreed to it without a second's thought for the ordinary people of Cyprus, who are already struggling. The people now have to pay for the mistakes of the idiot bankers who bankrupted the country by buying Greek debt.
Cyprus position is that You either pay that 9.9% or you lose your entire pot of your savings.
The victims in all this are the Russians, followed by the British.
The only consolation for the British who bought property their for a song, before Cyprus joined the EU, are now worth hundreds of thousands, so is not that much of a blow.
But the Russians, with deposits of over 65 billion, are in for a good bashing.
how did 'friends in Portugal' lose this amount? This is the first I have heard of any such thing in Portugal. Yes, like in Spain and Greece a lot of people have transferred deposits abroad out of fear, there has been an increase in repossessions/mortgage defaults, and the recession has caused all sorts of economic problems... but no enforced money-grab of the kind reported in Cyprus has been made.
Cyprus has the most favourable tax arrangements with Russia, such that virtually every Russian funnelling cash out of the country does so via Cyprus.
Bailing out Cypriot banks and ensuring that no saver loses a penny would typically mean the low-paid taxpayers of Europe underwriting the millionaire tax evaders of Russia. I appreciate there'll be counter-examples that by definition will be unrepresentative, but that's the reality. I suppose it depends how you spin it.
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