Cyprus in turmoil over bailout deal

Residents of Cyprus are angry their bank deposits are subject to a one-time tax levy as part of a bailout deal for the cash-strapped island.

Eurozone finance ministers and the International Monetary Fund included the levy as part of a deal to give Cyprus $13 billion to avoid bankruptcy.

Under the eurozone and IMF plan, a tax of 9.9 percent would be imposed on deposits of $131,000 and up, while deposits under $131,000 would be taxed at 6.75 percent. The bank levy would hit everyone with money in Cyprus banks, including foreign nationals.

Cyprus’ parliament must approve the levy. Parliament postponed a vote on the controversial tax Sunday, pushing it back to Monday.

Local media say it is not likely lawmakers will agree to the bailout terms.

President Nico Anastasiades said in a televised address to the nation Sunday if parliament does not approve the levy, Cyprus faces bankruptcy and the possible exit of Cyprus from the eurozone.

Cyprus is the fifth eurozone member country to receive a bailout deal. However, Cypriot bank customers are the only ones among the five who are expected to help pay for the economic rescue through their personal savings.

Some Cypriots have been lining up at automated teller machines to take their money out of the banks. Monday is a national holiday, so banks will not open until Tuesday. Cyprus is considering closing the banks on Tuesday to avoid a massive run on accounts.

(Photo: M van den Dobbelsteen/