The plan would have imposed a 9.9 percent, one-time tax on all deposit accounts with more than $129,000 in funds, and a 6.7 percent tax would also be applied to deposits with less than that amount. The plan would have raised nearly $8 billion of the $20.33 billion proposed bailout, RTE News reports.
“No to new colonial bonds, no to subjugation, no to national dishonor and raw blackmail,” Cypriot House Speaker Yiannakis Omirou said, according to CBS News.
Cyprus would be the fifth euro-zone nation to receive a bailout in addition to Greece, Ireland, Portugal and Spain. Without a bailout, the country could default on $38.8 billion of financial obligations, thereby slashing investor confidence and plunging Cyprus into a financial crisis.
Proponents of the levy maintain that the tax would apply to foreigners who have taken advantage of the nation’s low taxes. Nearly one-third of all deposits in Cypriot banks are held by Russians, USA Today reports.
Opponents of the plan, however, said that the tax would likely hurt Cyprus’ citizens, adding that the move could reduce confidence in the banking sector and create a run on banks.