"Money in the Bank"..dangerous?

[Phanerothyme]

First of all the money is taxed when it is earned.

Secondly any interest it makes is already taxed.

Thirdly, what's left belongs to the person who saves it. What right has anybody to take it just because they think they can?

 

It is not 'tax,' it is theft.

If they are allowed to get away with this there is nothing they won't do.

 

Yet still the bankers who caused it go unpunished, are still obscenely overpaid, and still pocketing huge bonuses.

 

Where's the justice in that?

 

 

Quite. I don't see why this theft should be permitted.

 

Surely it is better to acknowledge that the reasons Cypriot banks were so attractive were the rates, and the tax climate, and the no-questions-asked attitudes to cash deposits.

 

When you lend money to the bank (savings) there is a risk. The value of your investment (loan) may vanish as well as plummet or flatline, depending on the performance of the bank. If the bank goes bust (as a few of the Cypriot banks would be in danger of), then you can join the list of creditors.

 

The Cypriot authorities need to let the banks that have overextended themselves go bust, and the prudent, well behaved ones to continue trading.

 

The current situation means that it doesn't matter whether you chose to invest wisely or stupidly, you're still going to get hit with a stick for someone else's incompetence.

 

The only people who do well out of this are the Cypriot bank bondholders, also lenders to the bank, who remain unaffected by the cash grab.

 

Put the ailing banks up against the wall and liquidate them before they burn anymore of other people's money. That's what should have happened here.

[SHYTOT]

Interest is income gained by savers. It's money you get for doing nothing other than leave savings in an account. So it's right to tax it.

 

Sometimes you're as inaccurate as MrSmith.

 

As the rate of interest is less than inflation it is hardly income. In effect folks pay the bank for them to keep your cash and the government then tax you as well.

[Cyclone]

This tax is no more theft than is any legally imposed tax. You might as well call PAYE income tax or VAT theft.

 

Letting the banks go bust might be best for Cyprus (although I doubt it), but I expect that it would be a contagion disaster for the rest of Southern Europe.

 

---------- Post added 19-03-2013 at 09:39 ----------

 

As the rate of interest is less than inflation it is hardly income. In effect folks pay the bank for them to keep your cash and the government then tax you as well.

 

Additional money that is given to you. It's income, inflation is irrelevant.

[SHYTOT]

This tax is no more theft than is any legally imposed tax. You might as well call PAYE income tax or VAT theft.

 

Letting the banks go bust might be best for Cyprus (although I doubt it), but I expect that it would be a contagion disaster for the rest of Southern Europe.

 

---------- Post added 19-03-2013 at 09:39 ----------

 

 

Additional money that is given to you. It's income, inflation is irrelevant.

 

So why do civil servants award themselves index linked pay increases and have index linked pensions?

Perhaps if they had performance related pay rises. If they reduce inflation to zero I will be OK with being taxed on any interest on my accounts.

[Cyclone]

Because they can I assume.

 

I'm not trying to make you okay with being taxed, you are taxed on income, interest payments are income, that's just the way it is.

[quisquose]

Because they can I assume.

 

I'm not trying to make you okay with being taxed, you are taxed on income, interest payments are income, that's just the way it is.

 

Agree, but the Cypriots are being taxed on deferred spend not income.

 

The Cypriot who withdrew his €10k last week to buy a car is not taxed, whereas if he decided to defer his spend until this week he will be taxed.

[Cyclone]

True, I don't think it's a good thing or fair, but I also don't think it's illegal.

[L00b]

The Cypriot who withdrew his €10k last week to buy a car is not taxed, whereas if he decided to defer his spend until this week he will be taxed.

He's still taxed on whatever's left in his account(s). Just less.

 

(agree with your point about deferred spending, all the same).

 

Some of the stories that have surfaced are, well...like the UK guy who just got proceeds from selling his UK house (around £350k) last week, and was pondering his choices whilst retiring locally. And we've not yet heard from tourists who found themselves short of €s and no means of getting any.

[Cyclone]

He's still taxed on whatever's left in his account(s). Just less.

 

(agree with your point about deferred spending, all the same).

 

Pretty unfair then isn't it. A wealth tax but only on wealth that happens to be liquid and stored in the involved banks.

[L00b]

Pretty unfair then isn't it.

Taxation is inherently unfair, just to higher or lesser degrees depending on the particulars of the tax and circumstances of those subjected to it.

 

As a landlord way-back-when in France (but already expatriate at the time), the French Gvt once did a nasty like that, that caught me full-on, in the mid- to late-90s: if you were expatriate, you were taxed on the first €0.01 of income, rather than the first €0.01 after the initial tax-free band of €6,000 (or thereabouts) applicable to French taxpayers.

 

New measure was tabled at the Assembly and voted on Dec 30 (or 31, can't remember but it was litterally within a day or two) and implemented with full effect as of Jan01. RoI impact: 14+% turned into 5%<, overnight.

 

Lesson well learned there, I can tell you. I only needed it the once.

 

A wealth tax but only on wealth that happens to be liquid and stored in the involved banks.

Well, that's only due to the degree of expediency required, isn't it? CY Gvt was expecting its bailout €s, at the 11th hour the Germans said "Nein", so then CY Gvt had to scramble to pony up the €5 or €6bn required to get their bailout €s. What's the easiest way of doing that? What are the easiest-identifiable, -accessible and '-monetizable' assets in our electronic world?

 

FWIW, I'd been waiting for the Irish Gvt to pull just the same trick for some time back now, I've only kept a 'losable' floater there for a while now.

 

Morale of the story: don't bank (i) with only 1 bank, (ii) only in one country and (iii) only in the EU