The small European island nation of Cyprus faces bankruptcy if they do not receive a €10 billion bailout from Brussels. However, part of the bailout deal under discussion will see a one off levy on all bank savings. The deal will see small saving up to €100,000 taxed at 6%, and deposits over €100,000 taxed at nearly 10%.
The proposals have angered Cypriots who feel betrayed by Brussels and their government. Many see the levy as a way for the eurozone to access the vast deposits in Cyprus made by wealthy Russians. As well as the proposed bank account tax Cyprus also faces the same strict spending cuts and tax hikes Greece has experienced as part of their bail-out deal.
The Cypriot government was due to vote on the bail-out package today, but the vote has been postponed until tomorrow, over fears the government would lose the vote.
The uncertainty caused by the bailout deal has seen markets slide across Europe and America and many have argued that a tax on savings will see investors pulling their money from Europe in general.
Banks in Cyprus will remain closed until Wednesday, over fears of a run on the banks, as people have been withdrawing as much as they can from ATM’S over the last 24 hours.
This would just not fly in any other country. I dont blame the Cypriots for attempting to riot. Anyone charged a tax like this in any country is going to be very angry. This is setting up an extremely bad precedence to solve the euro zone economic crisis.