[quote=patb]german taxpayers won’t pay for the bailout.[/quote]
This is certainly one aspect of it, and the IMF seems to have been pushing hardest for this levy. This has been building for awhile, with large protests against austerity that have not grabbed media attention prior to now. Cyprus depends on tourism, foreign retirees and it’s banking sector. It is a tax haven. So it’s not just a banking sector bailout, since the economy is affected. The route of the problem was exposure to Greek debt. Cyprus is divided into the Greek Cypriot and Turkish Cypriot (occupied) side. The Greek Cypriots have always maintained strong links with Greece.
Russians account for nearly 50% of deposits, and Brits make up a large number of retirees due to favorable tax treatment. I believe income tax used to be on a remittance basis, not on world wide income, and there is no CGT. There is money laundering, probably on a big scale, so a clean up is the quid pro quo for the bailout. We’ve seen big anti money laundering and tax evasion tactics by European and US powers. The message is if you want the benefits of club membership, play by the rules. I don’t think you would get away with this levy in the PIGS countries. Cyprus has always been bullied.
