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Cypriot President Says Alternative To Tax Levy Is Bankruptcy

posted 17 Mar 2013, 20:01 by Mpelembe   [ updated 17 Mar 2013, 20:01 ]

Cyprus President Nicos Anastasiades says he has no choice but to accept a levy on bank deposits to save the island nation from bankruptcy.

 NICOSIACYPRUS (MARCH 17 2013)(REUTERS) -  Britons living in Cyprus said they were outraged by the government's plan to impose a levy on bank deposits, as some threatened to withdraw their savings as soon as possible.

There are as many as 80,000 British citizens residing in Cyprus. Many live out their retirement here while others have made it their permanent home and work on the small Mediterranean island. Many Britons also have vacation homes here.

"On Tuesday I plan to go to the bank and withdraw all the money I have in there and have nothing left in there. You know. I can't trust them anymore, its theft, they are stealing from me, that's how I see it," said 51-year-old Susan Kearns.

Kearns, originally from Margate in England, is a radiographer at a Cypriot hospital and has lived in Cyprus since 2007 with her retired husband, who receives pension from the UK.

"Whatever savings you have got you can't afford to take a smack of six and half percent. It's more or less legalizing theft to me, in my opinion, the government seems to do what they will," said 71-year-old Arthur Savage from Nottingham, a retired news agent owner who has lived on the island since 2007 with his wife and also receives a pension from Britain.

" I think it is particularly unfair for people that have saved and tried hard to keep some money in the bank, and it's just a blanket tax across everybody. I understand people with higher savings getting taxed more, but 6.75 percent seems an awful lot of money to me. I think it's a very clever way of making sure that Cyprus pays its fair share," said British citizen Stuart Cowell.

51-year-old Cowell is a geography teacher at a private school on the island and has lived there permanently with his wife since 2002. They have two children at college in the United Kingdom.

Cowell said he was not planning to withdraw all his savings but worried that the government's plan might not be a one-off.

"If it works once they could do it again, they could do it again, they could do it again. And the mentality sometimes is lets get all our money out, that is human instinct, isn't it? Let's keep our cash, get it under the bed or something, and its I don't know, a very very worrying time," he said.

As for Constantine Georgiou, a 78-year-old British Cypriot who returned to Cyprusafter having lived in Britain for over five decades where he amassed a large fortune through various enterprises, he estimated he would lose some 75,000 euros from the taxes on bank deposits under the new plan.

But it would be unacceptable to impose the new rule on those who earn little, he said.

"The government should investigate thoroughly and find the people responsible for this mess, prosecute them, put them in prison, even if he is the ex-president, whoever is responsible. Because why should a small man? Because I met people with five thousand euros in the bank and they say why should we lose? We worked very hard to save that money," said Georgiou.

In a radical departure from previous aid packages, euro zone finance ministers want Cyprus savers to forfeit up to 9.9 percent of their deposits in return for a 10 billion euro bailout to the island, which has been financially crippled by its exposure to neighbouring Greece.

The decision, announced on Saturday (March 16) morning, stunned Cypriots and caused a run on cashpoints, most of which were depleted within hours. Electronic transfers were stopped. The proposed levies on deposits are 9.9 percent for those exceeding 100,000 euros and 6.7 percent on anything below that.

The move to take a percentage of deposits must be ratified by parliament, where no party has a majority.

President Nicos Anastasiades said on Sunday that Cyprus had to compromise and accept a tax on bank deposits in return for international aid, or else the island would have faced bankruptcy and an exit from the eurozone,