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Cyprus parliament delays vote on new depositor tax

Other News Materials 17 March 2013 21:53 (UTC +04:00)
The Cyprus parliament postponed until Monday a vote on a new bank depositors' tax, a measure that was agreed in Brussels to secure a long-awaited bailout, dpa reported.
Cyprus parliament delays vote on new depositor tax

The Cyprus parliament postponed until Monday a vote on a new bank depositors' tax, a measure that was agreed in Brussels to secure a long-awaited bailout, dpa reported.

That bailout, of up to 10 billion euros (13 billion dollars), was secured Saturday to bolster Cyprus' troubled banking sector and public finances.

But bank depositors will take a significant hit through the controversial new tax - deposits up to 100,000 euros will be levied at 6.75 per cent and higher deposits at 9.9 per cent.

Angry depositors at the weekend tried to withdraw money from their accounts from banks, which had however frozen the deposits and shut down online banking systems.

The new tax - the first of its kind applied as part of a eurozone bailout - is expected to generate 5.8 billion euros.

It will apply to both Cypriot residents and non-residents. About one-third of deposits are in the hands of foreigners, especially Russians and British.

The measure would have to be ratified by parliament, and a vote expected Sunday was postponed until Monday to allow for more consultation after some lawmakers raised objections.

President Nicos Anastasiades, who lacks a strong majority in parliament, warned Sunday that without a bailout the financial sector would collapse, plunging the country into bankruptcy.

With its coalition partner DIKO, the president's DISY party has only 28 of 56 seats in parliament.

The two main opposition parties - the communist AKEL and the socialist EDEK - said Sunday they would reject the bailout.

EDEK chairman Giannakis Omirou said the measure would destroy Cyprus as a financial centre.

Monday is a bank holiday in Cyprus and, according to local media reports, the government would keep financial institutions closed on Tuesday as well to avoid a run on banks.

The one-time "stability levy," which would be applied immediately, was expected to be made law by Tuesday.

A cabinet meeting was scheduled for Monday, after which Anastasiades was to address parliament.

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