This is one of many of my motivations for emigrating as the writing is on the wall for private property and savings in the UK and taxes are too high for business risks to make sense. The Conservatives had a window of opportunity to sort out Labour's mess and by choosing Camoron as leader, who choose his economically illiterate friend Osborne to be Chancellor.
We are now over half way through this Parliament, so it is now too late for the necessary changes to be made, not that he has a clue what to do anyway, apart from what the socialists in the Treasury tell him is best.
The three year window of opportunity they had is now closed as our national debts are now over 90% and growing and once you are over 90% you have started on the slippery slope to default. The ONLY way the UK can now avoid defaulting is by inflating our debts away, so savings and pensions for those who have already bought an annuity will be next to worthless over the next 5 to 10 years. The Mansion Tax from the 2015 Labour-Lib Government will be the start of the confiscation of ALL property. Desperate situations will require desperate measures as Cypriot bank account holders are now finding.
The EU have done this (part of Merkel's electioneering) on the basis of Russian Mafia money in Cypriot banks and indeed some of the money there will be. But these is also much legitimate Russian and Ukrainian money from a very favourable tax agreement between Russia and Cyprus, which Ukraine also uses. The previous Cypriot President has in large part created this situation where he was an out and out communist who wasted large amounts of money and supported those, who supported him.
Cyprus is now one of the more corrupt countries in Europe. It will also hit UK property owners, who will have bank accounts there.
Where the Greek Sovereign debt haircut, which only included private investment and not EU institutions has hit investment in the Eurozone bonds from the private sector, so the same will be true in future for any sort of investment. What investors and business people hate most of all in uncertainty, as the return of the money is always more important than the return on the money. I very much doubt that Russia will take this sitting down and also where many Russian and Ukrainian businesses in Cyprus (many shell companies) will have been hurt, they will now relocate elsewhere, so Cyprus will lose this Corporation Tax.
Even worse about 50% of the money deposited in Cyprus is from Russians, I now expect capital flight from Cyprus to probably Switzerland, how will Cypriot banks cope with this and will the Cypriot Government either have to use Target 2 borrowing to cover this or introduce capital controls in the next few days? If they use Target 2 borrowing, this will increase Northern Europe's liabilities in the event of a Euro breakup.
In the past I looked at Cyprus for an off-shore company with their 10% corporation tax and then decided that for various reasons, including being inside the Euro and EU and all the uncertainty this involves with tax uncertainty due to future tax harmonization within the Eurozone and also local politics and corruption. One of the Caribbean tax havens will better suit my purpose.
Taxes on savings and foreign company dividends in Ukraine are 5%, so it will reduce my tax bill and also I need a stronger place for the rule of law for all of my Intellectual Property than Ukraine, so setting up a company in somewhere like the Cayman Islands makes sense and also having a US dollar account will help, where I hope some of my business interests within two years will be stateside.
I have been hit hard by the current recession and always had a passing interest in economics, so I decided in 2008, never again, do I want to be behind the curve and get hurt financially, so this is why I'm now trying to keep ahead of the curve, out of self interest, but I'm always happy to share those thoughts with you as your comments and knowledge provoke further thoughts and further my understanding, where I still have much to learn.
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Topic: Cyprus Bailout robbery! (Read 4029 times)