After widespread anger over the plan to tax regular people's bank accounts to pay for a big bank bailout, Cyprus's government reworked to the deal to protect small savers. Unfortunately, the new tax plan is unlikely to change anyone's mind about the fairness of having their savings taken away.
To quickly recap, it was determined over the weekend that Cyprus's banks would need a 10 billion-euro package to shore up their financial situation. Much of that would come from central bank loans, but the biggest chunk—about 5.8 billion euros—would have to be raised by the government in Nicosia. To make up the bulk of the shortfall, the government would drop a one-time tax levy on all bank deposits, including those that are supposed to be fully insured.
The original plan was to tax everything above 100,000 euros at 9.9 percent, and everyone below that mark at the lower rate of 6.75. (100,000 euros being the cutoff for the insured limits.) The new version would keep that original plan in place, but exempt all savings below 20,000 euros, protecting the poorest Cypriots from the levy. The problem, as has been noted, is that if other rates in the plan remain unchanged, they'll never raise all of the money needed to meet their share of the bailout.