Saturday, July 19, 2014

Spain Institutes Tax On Savings; Will They Now Raise It to 10%?

An EPJ reader emails:

Some time ago you posted:

Recently, the EU announced that it is looking into legislation to allow the savings of EU citizens to "be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis."

On Friday, the Spanish government approved a 0.03% tax on all bank deposits. It's btw a retroactive tax.. They're going back to January 1st.

A few regions of Spain had already implemented the tax, but the Spanish government now expanded it.

From 2 weeks ago:

Speculation that this would happen. From over a year ago. 

The amount they're confiscating is pretty small and won't solve the problems they claim to be solving, so one has to wonder:

Could this be a test case for the 10% confiscation of savings the IMF recommended last year?
From the IMF's Fiscal Monitor (Oct 2013) 

The sharp deterioration of the public finances in
many countries has revived interest in a “capital levy”—
a one-off tax on private wealth—as an exceptional
measure to restore debt sustainability. The appeal is
that such a tax, if it is implemented before avoidance
is possible and there is a belief that it will never be
repeated, does not distort behavior (and may be seen
by some as fair).
The tax rates needed to bring down public debt to
precrisis levels, moreover, are sizable: reducing debt
ratios to end-2007 levels would require (for a sample of
15 euro area countries) a tax rate of about 10 percent
on households with positive net wealth.

1 comment:

  1. never be repeated.never again. not in a million years cross out hearts and hope to die