Cypriot parliament rejects EU-IMF bailout tax on bank deposits

Cypriot lawmakers have overwhelmingly voted against a controversial levy on bank deposits, proposed as a condition for a 10-billion-euro ($13 billion) loan by the European Union and the International Monetary Fund.

The Cypriot parliament rejected the tax bill, with 36 votes against, no votes in favor and 19 abstentions, on Tuesday, house speaker Yiannakis Omirou said. The bill would have imposed a one-time tax of up to 9.9 percent on bank deposits over 100,000 euros as a condition for the EU-IMF bailout package. Bank customers with deposits of 20,000 to 100,000 euros must pay a 6.75-percent tax.

Thousands of anti-austerity protesters cheered outside the parliament building in the capital, Nicosia, as the announcement was made.

Ahead of the vote, several lawmakers warned that the controversial measure would destroy Cyprus’s economy.

The European Union and the International Monetary Fund had demanded that Nicosia impose a levy on its bank accounts to raise nearly six billion euros from depositors to secure the bailout of about.

During the debate on the bill on Tuesday, Marios Garoyian of Diko party called on the MPs to reject the rescue package.

“This is blackmail and Diko proposes the bill is rejected, but yes to an adjustment program… We want a European rescue, not European destruction,” Garoyian told fellow lawmakers.

The long-drawn-out eurozone debt crisis is viewed as a threat not only to Europe, but also to many of other developed economies in the world.