While it's not illegal, it's hard to argue that this move is just or moral. Yes a country can levy taxes however they like, but a surprise 10% wealth tax is unprecedented. The analogy with VAT/income/property is a bit difficult because in almost any case where a government has instituted those taxes the populous would have fair warning before they went into effect. At least in America, these things weren't enacted overnight with no legislative oversight/debate, and I doubt in any other Developed nation such a thing has occurred.
That said, I can understand why they went this route. It's basically a free down payment on an emergency loan mostly provided by wealthy Russians. Again, not illegal, but it isn't exactly just to have foreigners pay for your countries debts. I don't feel terribly sorry, since most of that Russian money likely came from less than reputable means. But as the saying goes, two wrongs don't make a right.
But the repercussions will be far reaching. First off, Cyrpus can expect a run on their banks from foreigners. Don't know if they have plans on stopping that, but I don't see why any foreigner would keep money there. Secondly, Smaller countries (and possibly large ones as well) in financially precarious situations will probably start seeing a run on their banks. This can set off contagion in a region without a strong central economic force to stave it off.
Though I expect some off-shore type country to pass a law soon stating they will never perform such a tax, and a lot of money will start flowing into their banks.
That said, I can understand why they went this route. It's basically a free down payment on an emergency loan mostly provided by wealthy Russians. Again, not illegal, but it isn't exactly just to have foreigners pay for your countries debts. I don't feel terribly sorry, since most of that Russian money likely came from less than reputable means. But as the saying goes, two wrongs don't make a right.
But the repercussions will be far reaching. First off, Cyrpus can expect a run on their banks from foreigners. Don't know if they have plans on stopping that, but I don't see why any foreigner would keep money there. Secondly, Smaller countries (and possibly large ones as well) in financially precarious situations will probably start seeing a run on their banks. This can set off contagion in a region without a strong central economic force to stave it off.
Though I expect some off-shore type country to pass a law soon stating they will never perform such a tax, and a lot of money will start flowing into their banks.