The parliament rejected a proposed windfall tax on bank profits yesterday after a dramatic vote that ended in a 25-25 tie, with four abstentions effectively deciding the outcome.
The bill, proposed by left-wing AKEL party, would have imposed a 5% solidarity levy on excess bank profits for 2024 and 2025, stemming from higher lending rates and interest earned on deposits at the European Central Bank.
The vote came after intense lobbying from all sides, with banks, the government, and even the Central Bank making last-minute efforts to prevent the bill’s passage.
The Ministry of Finance had earlier deployed an Interest Rate Subsidy Scheme to sway opinion, while some banks rushed to announce rate reductions.
Twenty-five MPs from DISY, DIKO, DEPA parties and MP Alexandra Attalides voted against the bill, while 25 legislators from AKEL, ELAM, EDEK, the Greens, DIKO MP Zacharias Koulias and independent MP Kostis Efstathiou voted in favour. Under parliamentary rules, tied votes result in rejection.
The four abstentions – DIKO MPs Pavlos Mylonas and Christos Orphanides, DEPA MP Michalis Yiakoumi and independent Andreas Themistocleous – proved decisive after intense behind-the-scenes negotiations.
AKEL Secretary General Stefanos Stefanou argued the tax would target only excess profits, noting that banks saw 100% profit increases in 2022-23 due to interest rate hikes.
However, DISY MP Onoufrios Koulla countered that banks would likely pass any new tax onto borrowers.
The heated debate also revived tensions over Cyprus’s 2013 financial crisis, with DIKO leader Nikolas Papadopoulos expressing pessimism about the country’s recovery, citing ongoing political games that he claimed were steering Cyprus “for the rocks”.
