EU insists on deposit tax after Greek parliament rejection of bailout plan
European Union's finance ministers have reiterated their insistence on a one-off tax on bank deposits after on Tuesday Greek Cypriot lawmakers unanimously rejected a bailout plan.
Finance leaders from the European Union insisted on imposing a one-off tax on deposits in Greek Cypriot banks following the rejection of the proposed bailout deal.
The EU takes note of the voting result and the Union is "ready to support reform efforts," said Jeroen Dijsselbloem, Dutch finance minister and president of the Eurogroup, adding however that the Union was insistent on the controversial deposit tax.
German Finance Minister Wolfgang Schauble said he "regrets" the Greek Cypriot decision, adding necessary measures had already been put in place against fallout for the rest of the Eurozone from the rejection of the bailout plan.
Schauble said the deposit tax was specific to the Greek Cypriot side and it would not be implemented in other states, while asserting that the proposal "remains on the table."
Luxembourg Finance Minister Luc Frieden urged his EU counterparts to gather immediately to prepare a new bailout package.
Frieden said he respected the decision which he said would do no good to either the EU or Greek Cypriot side, and he suggested to search for alternatives.
EU finance ministers had announced last week abailout deal to salvage the debt-ridden Greek Cypriot economy that proposed imposing a one-time tax on bank deposits.
The proposal stipulates that depositors with less than 100,000 euros would have to pay a tax of 6.75%, while those with more than 100,000 in their accounts would pay 9.9%.
Greek Cypriot lawmakers overwhelmingly rejected the EU plan with no votes in favor, 36 against and 19 abstentions.
Moscow was angered that Russian citizens, with deposits of around 25 billion dollars in Greek Cypriot banks, would be heavily hit by the measure as President Vladimir Putin called the EU package "unjust, amateurish and dangerous."
Cypriot Finance Minister Michael Sarris's Moscow visit on Tuesday is expected to make Russian involvement in the bailout plan all the more likely.
Wednesday, March 20, 2013