Darvas, Zsolt.
On Saturday morning, after a marathon meeting of the Eurogoup, it was decided to impose a one-time wealth tax on deposits in Cypriot banks: 6.75% on deposits below €100,000 and 9.9% on deposits above this threshold. Involving depositors was a wise decision and a wealth tax is a mild form of bailing-in, as I argued in a post last week.
The intentions are right, because, as a first principle, taxpayers should not foot the bill for private-sector losses. In Cyprus, there is a special aspect related to suspected money-laundering, but in any case, tax rates were so low in Cyprus that the return over a longer period, even considering the one-time wealth tax on deposits, will likely exceed the return in other countries. Also, without a bailing-in of depositors, a publicly funded bank rescue in Cyprus would have seriously endangered fiscal sustainability. Without a bank rescue, Cypriot banks would have collapsed, leading to much worse outcome for all involved.
Πηγή: Bruegel