ATHENS -- Lawmakers in Cyprus on Tuesday voted against a bailout plan that officials had hoped would stave off a chaotic government default and keep the island republic part of Europe's single-currency system.
In a resounding rejection, not a single one of Cyprus' 56 lawmakers supported the proposal to impose levies as much as nearly 10% on bank deposits in exchange for $13 billion in aid from Europe and the International Monetary Fund to prop up the island's faltering banks.
Instead, 36 lawmakers voted against the plan, with nineteen abstaining and one absent.
The government's plan, a revision of a more extensive tax negotiated over the weekend, would have exempted deposits of as much as $26,000 from the proposed levy. The proposal called for Cypriots with savings of $26,000 to $130,000 to be subject to a 6.75% one-time tax, officials said Tuesday. Amounts above $130,000 would have been taxed at a rate of at least 9.9%.
Although the proposal retreated from the initial plan announced Saturday to tax private and corporate accounts of all amounts, it remained at the center of fierce debate on the island and beyond its shores. Legislators had twice postponed a vote on levying the savings tax, sending streams of depositors to ATMs to empty their accounts.