Cyprus Mulls Zero Tax on Small Savers

World | March 19, 2013, Tuesday // 14:37|  views

A man passes by anticapitalist graffiti in dowtown of Nicosia, Cyprus, 19 March 2013. Photo by EPA/BGNES

Savers in Cyprus holding less than EUR 20,000 may be exempt from the controversial bank levy, the Cyprus finance ministry has suggested after the measure was slammed as sheer larceny.

The plan triggered an outrage that ordinary savers would be forced to pay a levy of 6.75%.

The new plan would keep that levy on deposits over EUR 20,000, with those over EUR 100,000 charged at 9.9%.

The controversial tax is a condition for Cyprus to get a EUR 10 B loan from the EU and IMF, to rescue its banks.

A crucial vote is looming in the Cypriot parliament on the bailout deal - expected to start at 18:00. But there is still much uncertainty, and it is expected to be very close.

President Nicos Anastasiades has urged all parties to back the bailout, saying Cyprus will be bankrupt if the deal does not go ahead.

The Cyprus central bank chief, Panicos Demetriades, has warned that scrapping the tax on small savers would scupper the plan to raise EUR 5.8 B in total from bank deposits.

He also predicted account holders could suddenly withdraw 10% or more of the total in Cypriot banks if the levy was imposed.

At the same time, Demetriades said he favored imposing the levy only on accounts above 100,000.

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Tags: Cyprus, bank, levy, tax, savers


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