Cyprus proposes exempting deposits under €20,000 from bank tax in bid for Parliament approval

The Cypriot government has revised its plan for a deposit tax to exempt savers with less than 20,000 euros in the bank in a bid to get Parliament’s approval for the levy.

According to the draft law submitted to the House’s economic committee on Tuesday morning, depositors with 20,000 to 100,000 euros in the bank will face a 6.75 percent, as before. Those with more than 100,000 euros will be charged at a rate of 9.9 percent, as was agreed at a Eurogroup meeting that ended on Saturday morning.

Eurozone finance ministers agreed on Monday night during a teleconference to allow Cyprus to make changes to the tax as long as it raised the agreed amount of 5.8 billion euros.

It is estimated that the exemption of deposits under 20,000 euros will leave Nicosia with a 400-million-euro shortfall. It was not clear how this gap would be filled.

If the bill meets with the parliamentary committee’s approval, it will be debated and possibly voted on later on Tuesday.

However, President Nicos Anastasiades is struggling to get the support he needs to pass the tax.

Anastasiades needs 29 votes for a majority in the 56-seat Parliament.

His Democratic Rally party (DISY) has 20 seats and will rely on support from its coalition partner, the Democratic Party (DIKO), which has eight MPs and then at least one of the two European Party (EVROKO) deputies or an independent lawmakers to support the tax.

The Communist Party (AKEL), the Socialists (EDEK) and the Greens said they would reject the levy.

However, DIKO indicated on Monday that it would not support the tax. It referred to the Eurogroup’s decision to approve the measure as “catastrophic.”

Anastasiades was due to speak to German Chancellor Angela Merkel and Russian President Vladimir Putin on Tuesday.

Cypriot Finance Minister Michalis Sarris was also expected in Moscow for talks on Tuesday.

Defense Minister Fotis Fotiou told Skai TV that Cyprus is examining other options should Parliament choose to reject the deposit tax.

“If this does not pass through Parliament then it is part of responsible politics for us to look at Plan B, which we are examining but can’t discuss publicly,” he said.

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