Can a government levy charge on bank account without your approval?

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sharktale1212

Herald
I know this thread might belong to the News section, I just thought people should know about it. Something really interesting:

Cyprus has asked money from the European union as their financial sector is in shambles. The caveat for the deal was every one having a saving needs to be taxed at 10% ie if you have 100 bucks in your account, the government will automatically hack off 10 rs for its use (reminds me what can go wrong with attaching a bank account with aadhar card). Once this news was out, they promptly closed the banks to avoid a bank run, though all the ATMs ran dry. Now the banks will remain closed for 4 days till Thrusday.

http://worldnews.nbcnews.com/_news/...f-bank-balances-in-return-for-eu-bailout?lite

They did try amending it to charge a handful of people (the Russians hiding money in Cyprus banks):
http://www.bbc.co.uk/news/world-europe-21842036
http://online.wsj.com/article/BT-CO-20130319-709586.html

And then finally sense prevailed, the resolution was defeated in the Parliament:
http://www.businessinsider.com/cyprus-parliament-vote-on-bailout-deal-2013-3
 
That's outright legal fraud. If the government wants to skim off the money from bank accounts, then why have it issued in the first place?
 
I have no idea why are they forcing Aadhar on us. Over that this NPR card. I am pretty sure that there is some big scam or conspiracy waiting to happen.

I still didnt make my aaadhar card and i wont until, i have no other choice.
 
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Aadhar is a joke already. At some places they ask for Aadhar along with another ID proof. If so, what use is the UID in the first place? I can just show my Passport.
 
Government can come with a better way to increase the scope . The Tax/deduction in Cyprus is a one off payment .

Lets say government comes with a new wealth Tax norm , any one who has movable or immovable assets above 1,00,000 Rs will pay a flat 5% as surcharge . Sonia Gandhi can do this .
 
A bad move for everyone involved but you have to look at the bigger picture. They might have no other option.

When a company goes bankrupt, all the assets are liquidated and the debtors are paid a percentage of their original money owed. For example ABC corp is bankrupt. They have 1 crore in assets but they owe 2 crores. Each debtee gets 50% of their money back.

When you are add money to a bank, they don't have that cash sitting in a vault. If you have 1 lac in a bank, the bank owes you 1 lac and are repaying at an interest equivalent to your savings account interest rate. Also consider that the Reserve Requirement is only 10% in most countries. i.e., only 10% of all depositors money is in the bank's vaults at any time. Now the bank collapses, what happens? 90% of all money owed to depositors is not there. So everyone loses 90% of their money (minus whatever insurance or government backing the bank has in place).

What the Cyprus government did is ask the EU for a bailout. The EU (in this situation, someone like a bankruptcy administrator) said they would back the banks debts (i.e., safeguard the depositor's money) but only if a discount of 10% is given by the debtee to the debtor. A reasonable thing to ask, given the situation. Cyprus have to decide whether they want to take the deal or come up with the money in some other way or let the banks collapse in due time.

Edit:
This is an interesting read that gives some more details.
http://www.creditwritedowns.com/2013/03/the-cyprus-bank-deposit-bail-in.html

Update: It also looks like the Orthodox Church has offered up their whole property to the government in exchange for bonds. The property in valued close to a 100 billion so that might take care of the immediate issue.
 
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