For Cyprus, The Pain Is Only Just Starting

If the suffering, yet docile, Cypriot serfs thought deposit confiscation would be the end of their problems under the European feudal system, they are about to be shocked. Because as part of their banking sector bailout, the country is set to get a "loan" from the Troika, a loan which comes with a Memorandum of Understanding, aka a "blueprint for austerity", with dictates terms for government revenue increases and spending cuts (of the variety that nearly caused America's leader to blow a gasket when he was describing the untold devastation that would result if the rate of acceleration in US budget spending dared to be slowed down even by a tiny bit). Today, a draft of the revised Cypriot MOU being prepared by the head of the IMF mission to the island nation, Delia Velculescu, leaked and can be found in its 24 page entirety here. However, for the benefit of our Cypriot readers, here is the important part: the listing of the anticipated austerity tsunami coming, not to mention healthcare system, "pension reform" changes and other proposals the ECB and the IMF are imposing on Cyprus as part of their generosity to keep the recently insolvent country as a well-behaving serf in the Eurozone.

Key highlights:

• Freeze public sector pensions
• Increase the statutory retirement age by 2 years for the various categories of employees
• Reduce preferential treatment of specific groups of employees, like members of the army and police force, in the occupational pension plans, in particular concerning the contribution to the lump-sum benefits;
• Reduce certain benefits and privileges for state officials and senior government officials, in particular by
  suspending the right to travel first/business class by state officials,
  senior government officials and employees with the exception of
  transatlantic travel.
• Increase excise duties on energy, i.e., on oil products, by increasing tax rate on motor fuels (petrol and gasoil) by EUR 0.07
• Increase the standard VAT rate from 17% to 18%.
• Introduce a tax of 20% on gains distributed to winners of betting by the National Lottery for winnings of EUR 5,000 or more
• Increase fees for public services by at least 17% of the current values
• Increase excise duties on tobacco products, in particular on fine-cut smoking tobacco, from EUR 60/kg to EUR 150/kg. Increase excise duties on cigarettes by EUR 0.20/per packet of 20 cigarettes.
• Introduce a permanent contribution of 3% on pensionable earnings to Widows and Orphans Fund by state officials who are entitled to a pension and gratuity. Introduce a contribution of 6.8% on pensionable earnings by officials, who are entitled to a pension and gratuity but are not covered by the government's pension scheme or any other similar plan;
• Actuarially reducing pension entitlements from the General Social Insurance Scheme by 0.5% per month for retirements earlier than the statutory retirement age at the latest from January 2013, in line with the planned increase in the minimum age for entitlement to an unreduced pension to reach 65 (by 6 months per year), between 2013 and 2016;
• Ensure a reduction of seasonal hourly paid employees by 992 from 1806 in 2012 to 814.
• Implement a four-year plan as prepared by the Public Administration and Personnel Department aimed at the abolition of at least 1880 permanent posts over the period 2013-2016.
• Ensure additional revenues from property taxation of at least 70 million by updating the 1980 prices through application of the CPI index for the period 1980 to 2012
• Increase the statutory corporate income tax rate to 12.5%; Increase the tax rate on interest and dividend income to 30%.
• Increase the bank levy on deposits raised by banks and credit institutions in Cyprus from 0.11% to 0.15% with 25/60 of the revenue earmarked for a special account for a Financial Stability Fund
• Undertake a reform of the tax system for motor vehicles, based on environmentally-friendly principles, with a view to raising additional revenues, through the annual road tax, the registration fee and excise duties, including motor fuel duties.
• Ensure a reduction in total outlays for social transfers by at least EUR 113 million through: (a) the abolition of a number of redundant and overlapping schemes such as the mothers allowance, other family allowances and educational allowances; and (b) the abolition of supplementary allowances under public assistance, the abolition of the special grant and the streamlining of the Easter allowance for pensioners.
• Ensure a reduction of at least EUR 29 million in the total outlays of allowances for employees in the public and broader public sector by i) taxing pensionable allowances provided to senior government officials and employees (secretarial services, representation, and hospitality allowances) in the public and broader public sector  ii) reducing the allowances provided to broader public sector employees and reducing all other allowances of broader public sector employees, government officials and hourly paid employees by 15%; and iii) reducing the daily overseas subsistence allowance for business trips by 15%. Ensure a further reduction the subsistence allowance of the current allowance when lunch/dinner is offered by 50% (20% - 45% of overseas subsistence allowance instead of 40% - 90% currently paid).

And last but not least:

• Increase excise duties on beer by 25% from EUR 4.78 per hl to EUR 6.00 per hl per degree of pure alcohol of final product. Increase excise duties on ethyl alcohol from EUR 598.01 to EUR 956.82 per hl of pure alcohol.

So the stronger the booze, and the faster it gets one drunk, the more expensive is will be.

In brief: for the Cypriot serfs the pain is just starting.

Troika Draft MOU source

Comments

[NoWayJose]

Best of all, the ECB and IMF can revise this at any time over the next several decades to turn the screw even tighter - either when revenues fall due to austerity - or they can choke off any recovery if one ever starts.

[Pandorable]

By the time the Cypriots realize the extent of the rape, they will be too tired and sore to defend themselves. The nightmare of greed and ego in power at it's worst---except that we're supposedly awake.

[Jack Burton]

From what I hear, Cyprus had a bloated banking sector that had totally distorted the Island economy. I hear that the EU was gunning for Cyprus ever since it get into the EU. My question is, why did they let them in in the first place. In 2008 Cyprus was already a distorted and bloated money laundering center. The EU has now got Cyprus by the balls.

I heard a Cypriot couple on the radio crying over the EU plan. They were both in their 40's, both had high paying banking jobs at the bank that is going to be liquidated, they both lost their jobs. They said they had earned their way into the upper middle class and now were ruined. They said "Who would hire us now, in our 40's.

I say, welcome to capitalism. Just because you sit on your ass in a bank you think society owes you a life time banking job at high pay? Too bad banker assholes! Go get a street sweeper job, or clean toilets at the airport. There is work out there for the willing. Stop crying about your bank jobs and get cracking. "Get a Job"!!

[Rockfish]

Cyprus - Cayman look they both begin with C oops!

[mahoneyct]

There is no difference between business class and cabin class on Cyprus Airways, except that in cabin class you don't have to witness the noisy union meeting in the forward galley. 

[Oldrepublic]

Cyprus got into the EU because Greece used blackmail against admission of countries like Poland if Cyprus was refused

[Moe Howard]

Fuck the EU and all the unelected technocrats destroying and enslaving the people.

Time for the people of Cyprus to thow them off the island.

[Joe A]

Structural Adjustment Prorgrammes bitchez!

[AnAnonymous]

All this to keep the 'american' middle class rolling...

No other way than sacrifying part of the middle class to ensure the rest live in comfort.

The way 'americanism' works.

[AnAnonymous]

A point though. The IMF and the rest of the global institutions are 'american' institutions.

Those kind of IMF plans are what was applied in some other countries, for crisis much less severe than the current one.

Applied is the word as for the moment for Cyprus'case, they are simply proposals.

The fact is that 'americans' have an issue as they have their hands on the global institutions which exerted plans in the past.

'Americans' are obsessed with keeping the face and as such, are cornered and must write in similar plans for Cyprus to the ones they enacted in the past. Or the global 'american' institutions' legitimacy might suffer even deeper. And 'american' countries, leechers among leechers, can not afford being shut down from the rest of the world. They have to maintain their global grip.

So, until the plan is applied, this list is only posturing from 'americans' urged to keep pretending.

The plan might never come to Cyprus as 'americans' find ways to exempt themselves.

But 'americans' must propose it in order to keep the face.
And they will kick the can of the non application on other 'american' institutions to explain to people who went through actual applications of similar plans why Cyprus escaped it.

Wont be surprising, it is the way 'americans' operate.

[Mototard at Large]

Want some Cyprus style pain? The FDIC (Federal Deposit Insurance Corporation) is already planning to use deposit insurance money to bail out banks in the US should they be getting close to failing.  Strangely enough, they co-authored a paper in December of 2012 with the BoE (Bank of England) that talked about these scenarios.

See http://tiny.cc/z4jcuw for an explanation and link to the joint FDIC/BOE paper.  Pay close attention to paragraph 34.  This is the interesting bit.

[Chaos_Theory]

Coach?   COACH?  You want the Mandarins to fly with the peasants?  F-ck that...

ATTICA....ATTICA...ATTICA

_{Minus the taxes and selling off of public assets (at pennies to the dollar for TPTB to scoop up), not all of these proposals are shiite.  However, in a bow to the sentiment of this fine group of free-thinkers, I'm all for cutting the chains and flinging poo at the Euro Reich.} 

[Tourist2008]

Seems "fair and balanced" to me.