Cyprus: European oligarchs must pay

Governments can and should impose a tax on the wealth of the super-rich to help resolve Europe’s banking crisis, says Attac

Cyprus is experiencing a banking crisis of Irish or Icelandic proportions: a bankrupt banking system, which the European Union is demanding taxpayers bail out. Ireland and Iceland took radically different decisions, one favourable to the banks, the other the citizens. Cyprus is taking a third way that is rich in lessons.

Ireland obeyed the EU and made citizens pay for all the debts of its banks in order to avoid losses by other European banks. The country saw an explosion of unemployment and the re-emergence of mass Irish emigration..

Iceland, under pressure from social movements and popular civilian mobilization, refused to endorse the losses of its banks. Braving the EU and the IMF, it allowed its banks to fail, protecting small and medium size depositors. Foreign customers attracted by high interest rates and creditors suffered losses. Iceland is now in a much better economic situation, and the Court of Justice of the EFTA (European Free Trade Association) has legally validated its decision.

By funding the rescue of its banks by taxing bank deposits, Cyprus is in radically new territory. The objective of the Commission, pushed by the German government, is twofold: to is to make the Russian oligarchs pay – and we cannot oppose that – while saving European oligarchs, that is to say, the shareholders of European banks, who lent recklessly to Cypriot banks.

This decision is obviously unacceptable for small and medium depositors, plundered for a matter they do not understand and in which they have no responsibility. They should be exempt, the super rich should pay. It is also unacceptable that once again irresponsible creditors are rescued by public money.

Instead, the European Union should impose a windfall tax on the richest and their huge fortunes  to gradually pay off bank debt – that would make for a very interesting precedent. It is possible to make the super rich pay by a very rapid method: parliaments could impose a direct tax on their bank deposits, and any financial products [bonds, shares] they own.

The European Attac network has for several months been calling for the imposition of a special tax on the assets of the wealthiest to help improve the public finances of Member States. The Cypriot precedent, with all its limitations, shows that it is only a question of political will.

Attac France, March 18, 2013

Humanite

Translation/edit by Revolting Europe