Cyprus Drops Tax on Savings – But What Happens Now?

The banking crisis in Cyprus continues – with banks there staying closed until at least next Tuesday .  Original plans to levy a tax of upto 9.9% on deposit accounts have been dropped after a vote in Parliament. The ECB has  threatened to withdraw support for the country’s banking sector if a bailout is not agreed by Monday.

The plan to tax most of the country’s deposit holders appears to have been dropped in favour of a mixture of some taxes on bigger deposits plus a  “solidarity fund” backed by state assets. The  fund could use Cyprus’s energy resources as collateral, or include state assets, pension funds or the property of the Church of Cyprus. A vote on the possible package should take place on Friday .

Here in Ireland in 2010 the government agreed to use some of the National Pension Reserve fund as part of the bailout agreement  See here  :

Eurozone finance ministers have agreed to hold a meeting in person, in Brussels, on Sunday.