IMF suggests 10% tax Bail-in on all Eurozone Household Savings



In a recent report, the IMF proposes the taxation of people’s savings within the Eurozone. According to Belgian newspaper L’Echo, this tax is going to be up to 10% of household savings and is going to be applied in 15 European countries. The aim of the tax, according to the report, is to make countries return to the dept levels of 2007, before the outbreak of the financial crisis.

More specifically, this suggestion which also provided a6.5 billion budget gap to Greece, was hidden in the Chapter of IMF report, entitled "Did we take lessons from the crisis?", on page 49. The authors of the report suggest a "capital contribution" issue, according to which, the sharp deterioration of public finances in many countries has become a cause to revive interest in a one-time levy on private wealth, as an emergency measure to restore debt sustainability.

In the same report, IMF aims to tax rich people. However, what can be described as problematic is the definition of ''rich'' and if middle class will be also part of this category. According to analysts and leading economists Pigou, Ricardo, Schumpeter and Keynes, this tax would be useful and fair, as this is one-off measure that may be better than the default. On the other hand, social analysts around the world claim that the victim, at this time, is going to be the entire society.

Since the beginning of the financial crisis of 2008, kinds of capital controls and asset confiscations have become common. A recent example is Greece, that had to pull funds directly from bank and brokerage accounts of suspected tax evaders, without prior notice or judicial due process. Furthermore, Cyprus had to confiscate 47.5% of domestic bank accounts over €100,000. Additionally, many other unique capital controls introduced by IMF were applied to Spain, Iceland, Poland, Argentina etc.

What can be said for sure is that this proposal is something that will be discussed a lot within the following days globally.

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