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| Cyprus considers zero tax on smaller bank deposits | Cyprus considers zero tax on smaller bank deposits |
| (35 minutes later) | |
| The Cyprus finance ministry suggests savers holding less than 20,000 euros (£17,000) would be exempt from a bank levy which has caused much alarm. | The Cyprus finance ministry suggests savers holding less than 20,000 euros (£17,000) would be exempt from a bank levy which has caused much alarm. |
| The plan was changed following outrage that ordinary savers would be forced to pay a levy of 6.75%. | The plan was changed following outrage that ordinary savers would be forced to pay a levy of 6.75%. |
| However, President Nicos Anastasiades has said that parliament is still likely to reject the levy. | However, President Nicos Anastasiades has said that parliament is still likely to reject the levy. |
| The controversial tax is a condition for Cyprus to get a 10bn-euro loan from the EU and IMF, to rescue its banks. | The controversial tax is a condition for Cyprus to get a 10bn-euro loan from the EU and IMF, to rescue its banks. |
| The president of the Eurogroup of eurozone finance ministers, Dutch Finance Minister Jeroen Dijsselbloem, emphasised on Monday that no other eurozone country would be forced to impose such a levy. | |
| "It won't happen in other countries because the banking sector is not so unbalanced, not overweighed with so many risks," Mr Dijsselbloem told the Dutch parliament on Tuesday. | |
| The new plan would keep the 6.75% levy on deposits over 20,000 euros, with those over 100,000 euros charged at 9.9%. | The new plan would keep the 6.75% levy on deposits over 20,000 euros, with those over 100,000 euros charged at 9.9%. |
| A crucial vote on the bailout deal in the Cypriot parliament is expected to start at 18:00 (16:00 GMT), but it may be delayed again. Protesters have gathered outside the parliament building ahead of the vote. | |
| Mr Anastasiades has urged all parties to back the bailout, saying Cyprus will be bankrupt if the deal does not go ahead. | Mr 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 5.8bn euros 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. | The Cyprus central bank chief, Panicos Demetriades, has warned that scrapping the tax on small savers would scupper the plan to raise 5.8bn euros 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, Mr Demetriades said he favoured imposing the levy only on accounts above 100,000. | At the same time, Mr Demetriades said he favoured imposing the levy only on accounts above 100,000. |
| Late on Monday eurozone finance ministers urged Cyprus to rethink the levy on bank deposits, which had been agreed on Saturday in Brussels. They have warned that Cyprus's two biggest banks will collapse if the deal does not go through in some form. | Late on Monday eurozone finance ministers urged Cyprus to rethink the levy on bank deposits, which had been agreed on Saturday in Brussels. They have warned that Cyprus's two biggest banks will collapse if the deal does not go through in some form. |
| Fearing a run on accounts, Cyprus has shut its banks until at least Thursday. The local stock exchange also remains closed. | Fearing a run on accounts, Cyprus has shut its banks until at least Thursday. The local stock exchange also remains closed. |
| Cyprus' banks were badly exposed to Greece, which has itself been the recipient of two huge bailouts. | Cyprus' banks were badly exposed to Greece, which has itself been the recipient of two huge bailouts. |
| Russian anger | Russian anger |
| On Monday there were jitters on global markets over Cyprus, amid shock that for the first time in the eurozone crisis ordinary savers would suffer a "haircut" on their bank accounts - a slice of their savings. | On Monday there were jitters on global markets over Cyprus, amid shock that for the first time in the eurozone crisis ordinary savers would suffer a "haircut" on their bank accounts - a slice of their savings. |
| Eurozone finance ministers are now calling on the Cypriot government to exempt all savers with deposits of under 100,000 euros. | Eurozone finance ministers are now calling on the Cypriot government to exempt all savers with deposits of under 100,000 euros. |
| Instead, they argue that wealthier savers should pay the levy at a higher rate - losing more than 15% of their investments, correspondents say. | Instead, they argue that wealthier savers should pay the levy at a higher rate - losing more than 15% of their investments, correspondents say. |
| However, many of those larger deposits are held by Russians, and Russian leaders have already reacted angrily to the Cypriot levy - on Monday President Vladimir Putin called it "unfair, unprofessional and dangerous". | However, many of those larger deposits are held by Russians, and Russian leaders have already reacted angrily to the Cypriot levy - on Monday President Vladimir Putin called it "unfair, unprofessional and dangerous". |
| Of the estimated 68bn euros in total held in Cypriot bank accounts about 40% belongs to foreigners - most of them thought to be Russians. | Of the estimated 68bn euros in total held in Cypriot bank accounts about 40% belongs to foreigners - most of them thought to be Russians. |
| The government fears a higher levy on these larger deposits would effectively destroy its financial sector. | The government fears a higher levy on these larger deposits would effectively destroy its financial sector. |
| The island's largest foreign investors, including many wealthy Russians, are considered likely to pull their funds out of the island if the one-off tax is too high. | The island's largest foreign investors, including many wealthy Russians, are considered likely to pull their funds out of the island if the one-off tax is too high. |
| Russia has also said it may reconsider the terms of a 2.5bn-euro loan it made to Cyprus in 2011, which was separate from the proposed eurozone bailout. | Russia has also said it may reconsider the terms of a 2.5bn-euro loan it made to Cyprus in 2011, which was separate from the proposed eurozone bailout. |
| The BBC's Mark Lowen in Nicosia says it now appears that a proxy battle of sorts is taking place over Cyprus: on the one side the EU is pushing for a lighter burden on lower savers and on the other, Russia is angry because its wealthy nationals would be taxed hard in Cyprus. Meanwhile, the tiny Cypriot economy's future hangs in the balance. | The BBC's Mark Lowen in Nicosia says it now appears that a proxy battle of sorts is taking place over Cyprus: on the one side the EU is pushing for a lighter burden on lower savers and on the other, Russia is angry because its wealthy nationals would be taxed hard in Cyprus. Meanwhile, the tiny Cypriot economy's future hangs in the balance. |
| The latest proposal, removing the levy from small savers, may not satisfy the eurozone because it would leave a shortfall, our correspondent says. | The latest proposal, removing the levy from small savers, may not satisfy the eurozone because it would leave a shortfall, our correspondent says. |