In Cyprus, a potential shift in the allocation of a special tax on bank deposits to fund social programs is under consideration. The proposal aims to redirect the 0.15% tax currently paid by banks into the Republic’s Fixed Fund towards addressing social issues and punctuality concerns.

The decision lies with Parliament, where a majority vote will be required to approve the change before government endorsement. However, discussions have arisen, particularly from the leftist opposition party AKEL, suggesting an increase in the tax rate to counter banks’ perceived excessive profits.

If AKEL’s proposal is adopted, banks could face higher annual contributions, posing challenges amid predictions of reduced profitability following potential rate cuts by the European Central Bank. The move to reassign the tax to support social initiatives is seen as a pragmatic solution with possible broad support.