IndexToday has an interesting story on a Ukraine
Wealth Tax.
The Prime Minister of Ukraine Arseniy Yatsenyuk
proposed on Wednesday 19th of March 2014 the adoption of taxes on wealth of
the richest Ukrainians in order to tackle the economic crisis in the country,
clarifying that the law will apply to him as well.
The Ukrainian prime minister stated that the proposed tax measures should
apply on deposits more than 50,000 hryvnia (less than 4,000 euros). The
measure is expected to affect approximately 10% of the population.
During the ministerial council meeting, Arseniy Yatsenyuk cited his own tax
return as an example showing that interest on his deposits amounted to
714,000 hryvnia (47,000 euros).
Mr Yatsenyuk specifically stated: "Rich people ought to share their
wealth with the country. It is time for justice. It is time to help the
country".
The online financial newspaper Ekonomitcna Pravda criticized this initiative
with the fear of a massive withdrawal of deposits especially nowadays that
the bank sector is in a difficult position because of the political and economic
crisis.
The Ukrainian economy is in a terrible position with a public debt of €75
billion, which the country accumulated mostly during the last years, and a
huge financial deficit.
Run on Banks Coming?
Certainly, if I had money in a Ukrainian bank I would want to get it
out. If everyone could, and did, there would be a massive run on Ukrainian
banks.
I picked this story up from ZeroHedge Ukraine Goes
Cyprus 2.0, To Tax Deposits Over 100,000 Hryvnia (To Appease IMF?).
He only had these two lines, likely from an economic feed, with and no links.
*UKRAINE PROPOSES NEW TAX ON DEPOSITS EXCEEDING 100,000 HRYVNIA
*UKRAINE TAX PROPOSAL WOULD INCLUDE 1.5% OF ALL DEPOSITS
No Peep in Mainstream Media
This is significant news, but there was not a peep on the Financial Times,
Wall Street Journal, Bloomberg, or the New York Times.
The only other reference I could find was Russian News on Rupaper.com:
Ukrainian Authorities Suggested to Tax Large
Deposits. This appears to be a translation and is somewhat garbled.
I will post a paragraphs "as is".
Over
50 thousand hryvnias (5,1 thousand dollars) need to be taxed Interest income
of deposits. About it as L_gab_znes_nform reports, the prime minister of the
country Arseniy Yatsenyuk declared. According to him, the relevant bill is
already submitted on cabinet consideration. Yatsenyuk noted that he is the
opponent of a tax on all deposits without exception, and specified that 90
percent of Ukrainians have deposits for the sum up to 50 thousand hryvnias.
"Other ten percent rich have to share with Ukraine, it is normal, so does
the whole world" — the prime minister declared. Yatsenyuk gave the
personal savings as an example. He told that last year gained 613 thousand
hryvnias of interest income, and from him didn't levy "any hryvnia
taxes". At the end of February of this year the National Bank of Ukraine
had to enter restrictions on removal of currency deposits in local banks in
an equivalent no more than 15 thousand hryvnias per day. Such decision was
made in connection with a mass conclusion of means from banks. According to
the Central Bank, only on February 18-20 Ukrainians discounted about three
billion dollars. In September, 2012 the Independent association of banks of
Ukraine reported that champions by the size of deposits in the country are
inhabitants of Kiev. The average size of deposits among capital investors at
that time made 26,6 thousand hryvnias. The smallest deposits appeared in
Zhitomir area — 3,2 thousand hryvnias.
Capital Controls
As I said, if I had money in a Ukrainian bank, I would want to get it
out. But the
above article explains limits on withdrawals were placed in February.
I mentioned capital controls on February 28: Ukraine Limits Withdrawals to 15,000 Hryvnia per Day (about
$1,500)
Smart individuals likely took out 15 thousand hryvnias per day since the end
of February. Really smart (or well connected) individuals wired out
everything in January before capital controls were placed.
Moral of the Story
Here's a hint, if you see capital controls, figure a wealth tax confiscation
will soon follow. And here's the moral of the story: If you think capital
controls may be coming, get your money out of banks now.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
