Wednesday, April 3, 2013

The IMF is Twisting the Knife in Cyprus

As if stealing from retirees, supermarket owners and others to the tune of 60%+ wasn't enough, the IMF is now demanding a 2% of GDP increase in taxes:

The International Monetary Fund (IMF), which is contributing 1bn euros, says they are "challenging" and will require "great efforts" from its population.

They will mean a doubling of taxes on interest income to 30% and a rise in corporation tax from 10% to 12.5%.

The plan, designed to stabilise the banking system and government finances, was agreed in principle last week.


The country is already planning to introduce austerity measures equivalent to 5% of GDP between 2013-15 through tax rises and spending cuts, but Ms Lagarde said further measures were needed.

She said the corporation tax increase and raising of the tax on interest rates to 30% would help bring in another 2% of GDP.

Can anyone really legitimately argue that people who may have just given up 60% of their net worth are under-taxed?  And as we have seen in Greece, increased taxation doesn't necessarily lead to an increase in taxes collected, not when your economy is in freefall.  How much do you think the corporate tax increase is really going to collect when people have stopped shopping because they have no money?

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