Cypriot parliament rejects levy on bank deposits

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　　The 56 member-chamber threw out the levy⁵ legislation with 36 against, 19 abstentions and no one in favor.

　　The levy was decided⁶ at the end of last week at a Eurogroup finance ministers meeting in Brussels, after Cyprus President Nicos Anastasiades was warned that emergency liquidity⁷ assistance to the Cypriot hard pressed banks would be immediately discontinued.

　　In a vain effort to build consensus⁹, the government had revised the provisions of the original law so as to spare small savers with up to 20,000 euro deposits from a 6.75 levy.

　　It suggested that deposits between 20,000 and 100,000 euros be taxed with 6.75 per cent and deposits of over 100,000 euros be slashed¹⁰ by 9.9 percent.

　　However the measure did not convince opposition¹¹ parties and even the junior government coalition¹² DIKO party which sided with the opposition in rejecting the bill.

　　President Anastasiades' own DISY party with 20 seats in parliament abstained¹³ when the bill was voted upon. One DISY deputy was absent on a trip abroad.

　　Parliament's decision was greeted with cries of joy by hundreds of flag-waving demonstrators who had gathered in a nearby square expressing opposition to the deposits levy and urging deputies to reject it.

　　Demonstrators shouted slogans such as "Cyprus belongs to its people", "Troika get out of Cyprus."

　　Among the demonstrators were several Spanish and Portuguese¹⁴ who said they shared the Cypriots' opposition to the deposits levy, because they feared that had the bill been passed they would be next in line for a deposits haircut.

　　During the two-hour debate the leaders of the five parliamentary parties denounced the Eurogroup for trying to impose a humiliating arrangement on one of the smallest EU member countries.

　　They accused some Eurogroup countries, most notably¹⁵ Germany, of aiming at demolishing¹⁶ the island's economy which is based on the services and banking¹⁷ sectors¹⁸ which cater¹⁹ for several thousand foreign businesses.

　　Approval of the levy legislation along with another bill increasing the corporate²⁰ tax from 10 percent to 12.5 percent was a condition for a 10 billion euro bailout by the Eurogroup and the International Monetary²¹ fund.

　　It is unclear how the decision will affect the bailout deal.

　　There was still no reaction yet by President Anastasiades who has to deal with the prospect²² of the immediate⁸ collapse²³ of the island's second largest lender, Cyprus Popular Bank, and a possible run on the largest lender, Bank of Cyprus.

　　Cypriot banks are due to reopen on Thursday following a two-day bank holiday decreed by the ministry²⁴ of finance as a way of preventing a bank run and calming down depositors jitters²⁵. No one could still say how depositors will behave in the face of a possible collapse of the banking system.

　　In a move reflecting anxiety over what could happen next, Britain sent a military plane carrying one million euros in cash to Cyprus on Tuesday for the needs of about 3,500 military personnel serving in two bases on the island in case cash machines and bank cards stop working.

　　The British defense²⁶ ministry said it would also give a choice to British servicemen to have their wages deposited in British bank accounts rather than Cypriot banks.

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