A recent report from the International Monetary Fund (IMF) discusses a super taxation of 10 percent on savings in the Eurozone. They claim it would solve the debt problem in most sovereign countries. It would be an alternative of higher taxes or spending cuts. The economists who wrote the paper hasten to say that it is a theoretical proposal. Still, it appears to be “an efficient solution” for the debt problem. For a group of 15 European countries such a measure would bring the debt ratio to “acceptable” levels, ie comparable to levels before the 2008 crisis. They write:
...“ The sharp deterioration of the public finances in many (European) 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)...
... There is a surprisingly large amount of experience to draw on, as such levies were widely adopted in Europe after World War I and in Germany and Japan after World War II. Reviewed in Eichengreen (1990), this experience suggests that more notable than any loss of credibility was a simple failure to achieve debt reduction, largely because the delay in introduction gave space for extensive avoidance and capital flight-in turn spurring inflation.
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”...
This is something that raises an eyebrow or two on every single face in Europe!
It is obviously causing concerns amongst citizens of Eurozone who sense a real danger with the security of their lifelong savings. They feel insecure and exposed to a real threat of losing part of their deposits which can simply evaporate. The example of Cyprus in March 2013 in which the Eurogroup and the IMF seized a big chunk of deposits in Cyprus banks to ameliorate the financial burdens of the island is real and well remembered.
An alternative to this is to consider Dubai (UAE). It is a white listed onshore jurisdiction that offers offshore services as well as opportunities that exist only in mature industrial and financial hubs. Banking and finance is very much a growth area through Dubai’s International Financial Center. There are many banking and finance related services opportunities and security. Further, international businesses moving to the UAE find themselves in a thriving market with excellent infrastructure between the West and the developing East able to generate new business. A pro government encouraging foreign investment has developed the country into a cosmopolitan centre welcoming a diverse specialist and competitive workforce.
Dubai offers a tax free environment with no corporation and income taxes, no exchange controls and trade barriers, no limit on repatriation of profits, strong incentives and pro business regulations. And on top of this the secrecy, asset protection and restricted exchange of information which are so vital today.
Our Oneworld MidEast can assist you with your personal and banking issues. We can do more. We can also set up your new business or expand in the UAE. We have specialist advisors to advise clients on banking corporate and tax planning. We offer you integrated, boutique services in strict confidence. Your Privacy is Paramount , as we say.