Lawmakers in Cyprus are still scrambling for a way to raise (EURO)5.8 billion ($7.5 billion) to help pay for an international bailout of the country's banks and government. 
 
 Protesters who wrote "NO" on their hands protesting outside of the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax... (Associated Press) 
 
 A plan to seize up to 10 percent of people's savings has been met with fury and it has raised concern, if not panic, in the rest of Europe about the security of bank deposits in times of financial turmoil. 
 
 On Tuesday, Cypriot lawmakers are scheduled to vote a revised plan that would not be so burdensome for people with less than (EURO)100,000 in the bank. Any plan must be approved by the other eurozone countries, which would then commit (EURO)10 billion in rescue loans to Cyprus. 
 
 Banks in Cyprus will remain shut until Thursday to give political leaders time to hash out a deal. 
 
 Here's a look at the plan and the problems it may pose. 
 
 HEY, HOW CAN THEY DO THAT? 
 
 As a member of the euro currency, Cyprus can to raise or lower taxes whenever it wants. It isn't the first time that a eurozone nation has raised taxes to cope with mounting debt and to prop up struggling banks. Residents of Greece, Portugal and Ireland _ all bailout recipients _ have seen their tax bills skyrocket in recent years as those countries tried to reduce their debts. But Cyprus is charting new ground here, and there could be legal _ and political _ challenges. 
 
 AND HOW EXACTLY WILL IT WORK? 
 
 Banks have already acted to seal off the amount of the levy _ a 6.75 percent tax on deposits under (EURO)100,000 and 9.9 percent on those above _ so depositors can't access it. Banks will remain closed until Thursday to avoid a rush of withdrawals while lawmakers finalize the move. They will vote on Tuesday, but some are seeking modifications, mainly to lower the tax rate on deposits under (EURO)100,000. To do that, however, they have to raise the rate for the larger depositors, since the overall scheme has to raise a total of (EURO)5.8 billion. 
 
 HAS THIS EVER HAPPENED BEFORE? 
 
 So far in the euro crisis, depositors have been protected. But European countries have taxed bank deposits before. In the 1990s, Italy levied a tax on every bank account to stave off the collapse of its lire currency. The rate, however, was miniscule _ 0.06 percent _ compared to what Cyprus is enacting. Iceland _ another island with an outsized financial sector, although worse weather _ also relied on depositors to prop up its banks. When the crisis hit there in 2008, Iceland protected its domestic deposits but reneged on deposit insurance for overseas, Internet-based accounts held by British and Dutch. Those two governments stepped in to help their citizens to the tune of $5 billion. The U.K. and the Netherlands sued Iceland unsuccessfully in a European court to get their money back, but Iceland has nevertheless started to repay some of that money. 
 
 European officials are promising this Cyprus is a unique case, and they are right in one aspect: Cypriot banks are overwhelmingly funded by deposits, not bondholders. So it wouldn't have been very fruitful to go after bondholders. 
 
 WHO IS AFFECTED? 
 
 All people with money in Cypriot banks _ except those with money in Greek branches, which will be sold to Greek banks. EU and IMF creditors clearly wanted to protect struggling Greece, but perhaps also saw that Greece is the most likely place in the eurozone for a bank run. Protecting depositors there minimizes that possibility. Of the more than (EURO)68 billion on deposit in Cypriot banks, foreigners hold about 40 percent _ and most of those are Russians. Cyprus could have only gone after non-EU depositors, but it may have been hard to distinguish between Cypriot and Russian savers, said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics in Washington. That is because many Russians have dual citizenship and many Russian businesses are registered on the island. Kirkegaard said Cypriots may paradoxically welcome this measure since the government just managed to widen its tax base to include a lot of Russians; the taxes levied in Greece, Portugal and Ireland were for residents alone to shoulder. 
 
 WHY DID CYPRUS NEED A BAILOUT? 
 
 Cyprus built its economy in recent years by becoming a financial center, much the way Ireland and Iceland before it did. Its banks offered Internet accounts to foreigners, were renowned for their service, provided substantial privacy to clients and had very low taxes. It worked so well that Cyprus' banking industry ballooned to nearly eight times the country's gross domestic product at the height of the boom. In December, it was still more than seven times Cyprus' (EURO)17.5 billion GDP. Russians _ looking for warmer climes, lower tax rates and shared culture in the form of Orthodox Christianity _ are thought to hold the majority of those accounts, with about (EURO)20 billion in the island's banks. 
 
 But Cyprus' banks held a lot of Greek debt and suffered significant losses when they took a writedown of those bonds as part of the Greek bailout. Much of Cyprus' bailout money will be used to recapitalize Cypriot banks to prevent them from collapsing. Like other eurozone countries, Cyprus has also seen its deficit and debt explode as growth has ground to a halt. And with the banking system so large, the government wouldn't have been able to bail it out even in a healthy economy. 
 
 WHY DO RUSSIANS KEEP SO MUCH MONEY IN CYPRUS? 
 
 Russian businessmen have preferred to place their savings in offshore jurisdictions, partly to escape political uncertainty and corruption in Russia. Cyprus offers a 10 percent corporate tax rate and relatively stable political situation. Cyprus is also believed to be a top destination for money-laundering. It is much safer for a corrupt Russian official to keep proceeds from illegal activities abroad, hiding information about their fortunes and holdings away from the prying eyes of Russian banking regulators. Russian officials estimated that about $49 billion, which is equivalent to 2.5 percent of Russia's gross domestic product, was wired to foreign accounts illegally last year. 
 
 WHAT HAS THE MARKET REACTION BEEN? 
 
 Stock markets and the euro dropped on Monday but not too much. Kirkegaard says that the decision to tap depositors indicates that the European Central Bank is confident that the risk of a bank run elsewhere in the eurozone is low _ and by excluding Greek branches of Cypriot banks, they have reduced the possibility even further. 
 
 But Heather Conley, director of Europe program for the Center for Strategic and International Studies, says it's hard to know the far-reaching implications of this one-off deal. The "exceptions" created to solve Europe's debt crisis are adding up, she said. And some investors may look at this late-night, three-day-weekend deal and see what she saw: a dress rehearsal for a country dropping out of the euro. 
 
 ___ 
 
 AP Writer Menelaos Hadjicostis contributed to this report from Nicosia, Cyprus. ||||| The latest European bailout is blowing up. 
 
 Two days after the European Union revealed a €10 billion rescue for Cyprus, the tiny island nation said its banks would not reopen at least until Thursday to give it more time to win the backing of parliament for a controversial tax on deposits. 
 
 The unprecedented tax on bank deposits led to a run on cash machines in Cyprus over the weekend. It also spooked investors, who feared that other weak eurozone states could eventually be forced down the same path, despite EU statements to the contrary. 
 
 Shares across the region fell Monday, and banks were hit particularly hard. The prices of government bonds across southern Europe also fell, pushing up yields. There were no signs of bank runs in other European countries, including Italy and Spain. 
 
 "The contagion from Cyprus is fairly limited but there is a tail risk that this measure could backfire," wrote Berenberg Bank analysts in a note. 
 
 As part of the plan to rescue Cyprus' outsized banking sector and head off national default, the EU said deposits of more than €100,000 would be subject to a one-off levy of 9.9%. Smaller depositors would be subject to a levy of 6.75%. 
 
 It was the first time that the EU has insisted on such terms for bank depositors as part of a bailout. The EU's bailouts of other nations, such as Greece, have been accompanied by strict budget restrictions and led to losses for bond holders and shareholders. 
 
 Related: 5 reasons why Cyprus bailout matters 
 
 Parliament had been due to vote on the plan Monday -- a bank holiday in Cyprus -- with the tax due to take effect Tuesday. But officials were working on changes to the proposals to force richer savers to bear a bigger share of the cost, reducing the burden on those with less than €100,000 in deposits. 
 
 The speaker of the parliament confirmed that the debate had been delayed until Tuesday, with a vote tentatively scheduled for midday ET. 
 
 After an emergency meeting on Monday, eurozone officials generally stuck to their guns. The reform plan approved on Saturday "is the best guarantee for a more prosperous future for Cyprus and its citizens," EU officials said. 
 
 The EU officials also said they would endorse a change to the original bailout plan that shielded small bank customers more than the proposal. 
 
 Either way, analysts said the levy set a dangerous precedent and could undermine depositors' belief that their savings are safe. 
 
 "The Cyprus deal may prompt Europeans to question that," wrote financial markets analyst and blogger Louise Cooper. "A fundamental safeguard to Europe's banking industry has been compromised for a tiny country costing 10-20 billion euros to bailout -- not a good trade." 
 
 The bailout, while small compared to the emergency loans supporting other troubled European nations like Greece, represents more than half the size of the €18 billion Cyprus economy. Cyprus is the third smallest economy in the eurozone, bigger only than Malta and Estonia. 
 
 The problem is its banking sector, which is several times the size of the economy. The country made a formal request for help last June after its banks were decimated by losses on Greek debt -- losses that caused lending to stall and sent the economy into a deep recession. 
 
 Negotiations on a bailout stalled last year after a previous government objected to the conditions that international lenders were looking to attach. They restarted following the election of President Nicos Anastasiades last month. 
 
 Related: Europe financial sector is fragile, says IMF 
 
 EU concerns about money laundering also hampered progress on a bailout. Cypriot banks have large volumes of international deposits, with Russian businesses believed to hold about $19 billion, according to ratings agency Moody's. As part of the bailout deal, Cyprus has agreed to an international anti-money laundering audit. 
 
 Russia has come to Cyprus' aid in the past, providing a €2.5 billion loan in 2011 to shore up government finances, but its participation in the new rescue was looking uncertain Monday after President Vladimir Putin attacked the tax on bank deposits. 
 
 "If such a decision was made, it would be unfair, unprofessional and dangerous," Putin spokesman Dmitry Peskov was quoted as saying. 
 
 In addition, a finance ministry spokesman said Russia was reviewing its position after not being consulted on the decision to impose the levy. 
 
 The International Monetary Fund was expected to contribute to the deal as it has in others. Christine Lagarde, the fund's managing director, said Saturday that she supports the terms and would recommend that the IMF help provide financing for it. 
 
 In addition to the tax on bank deposits, other conditions for the bailout loans include an overhaul of the financial sector and an increase in corporate taxes. 
 
 Cyprus is the fourth of 17 eurozone states to be granted a bailout by its EU partners and the IMF, after Greece, Ireland and Portugal. Spain has been given EU assistance to rescue its banks, but has so far avoided asking for a full sovereign bailout. 
 
 -- CNN's Elinda Labropoulou and Charlie Charalambous contributed to this article. ||||| Article Excerpt 
 
 Cyprus's parliament rejected its government's bailout deal with the euro zone without a single vote in its favor, a move that could hasten the potential collapse of its banks and send the tiny island nation hurtling out of the euro zone. 
 
 Even the ruling party of President Nicos Anastasiades, who negotiated the agreement four days ago, declined to support it, leaving the country with few options to avert a financial-sector meltdown. The rejection was centered on the most controversial aspect of the deal—a tax on individual bank deposits—and came even after officials tried to calm objections by exempting depositors with ... ||||| NICOSIA Cyprus overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout on Tuesday, throwing international efforts to rescue the latest casualty of the euro zone debt crisis into disarray. 
 
 The vote in the tiny legislature was a stunning setback for the 17-nation currency bloc, angering European partners and raising fears the crisis could spread; lawmakers in Greece, Portugal, Ireland, Spain and Italy have all accepted austerity measures over the last three years to secure European aid. 
 
 With hundreds of demonstrators outside the parliament chanting "They're drinking our blood", the ruling party abstained and 36 other lawmakers voted unanimously to reject the bill, bringing the Mediterranean island, one of the smallest European states, to the brink of financial meltdown. 
 
 Finance Minister Michael Sarris had already headed to Moscow, amid speculation Russia could offer assistance given the high level of Russian deposits in Cypriot banks. President Nicos Anastasiades, barely a month in office, spoke by phone with Russian President Vladimir Putin after the vote. 
 
 Anastasiades was due to meet party leaders at 9 a.m. (0700 GMT) on Wednesday to explore a way forward. 
 
 "The voice of the people was heard," 65-year-old pensioner Andreas Miltiadou said among a crowd of demonstrators jubilant after the vote. 
 
 EU countries had warned they would withhold 10 billion euros ($13 billion) in bailout loans unless depositors in Cyprus, including small savers, shared the cost of the rescue, an unprecedented step in the stubborn debt crisis. 
 
 The European Central Bank had threatened to end emergency lending assistance for teetering Cypriot banks, which were hard hit by the financial crisis in neighboring Greece. 
 
 The island's partners barely disguised their anger. 
 
 Euro zone paymaster Germany, facing an election this year and increasingly frustrated with the mounting cost of bailing out its southern partners, said Cyprus had no one to blame but itself for the gravity of the situation. 
 
 DEBTS TOO HIGH 
 
 "Cyprus requested an aid program," German Finance Minister Wolfgang Schaeuble told ZDF television. "For an aid program we need a calculable way for Cyprus to be able to return to the financial markets. For that, Cyprus's debts are too high." 
 
 Dutch Finance Minister Jeroen Dijsselbloem, who chairs the Eurogroup of finance ministers, said the bailout offer still stood providing the conditions were met. European Central Bank Governing Council member Ewald Nowotny called on Cyprus to show "discipline and the readiness to act rationally." 
 
 But it was Europe's demand at the weekend that Cyprus break with previous EU practice and impose a levy on bank accounts that led outraged Cypriots to empty bank cash machines and unsettled financial markets. 
 
 An important issue in negotiations has been the high level of deposits held in the island's banks by non-EU citizens and companies, notably from Russia, where Cyprus has established itself as a major provider of offshore financial services. 
 
 BACKLASH 
 
 The EU and International Monetary Fund are demanding Cyprus raise 5.8 billion euros from bank depositors to secure the bailout it needs to rescue its financial sector. They say a bailout of more than 10 billion euros would tip Cyprus's debt level into unmanageable territory for its 1.1 million people. 
 
 But lawmakers said the levy on deposits crossed a red line. 
 
 "You can't take a 10,000-metre jump without a parachute. And that's what they're asking of us," said George Perdikis of the Greens Party. 
 
 International market reaction has been muted so far but that might change. 
 
 While Brussels has emphasized that the measure was a one-off for a country that accounts for just 0.2 percent of European output, fears have grown that savers in other, larger European countries might be spurred to withdraw funds. 
 
 Dijsselbloem, the Eurogroup chair, said there would be no need to impose a levy in any of the 16 other euro countries. 
 
 Some Cypriots hope they can get aid from Russia, which has bailed out Cyprus in the past. Many Russians keep their money in Cyprus and operate businesses from there. 
 
 Russian authorities have denied that the Kremlin might offer more money, possibly in return for a future stake in Cyprus's large but as yet undeveloped offshore gas reserves, which have raised the island's strategic importance. 
 
 An influx of Russian money and influence since the collapse of the Soviet Union has led some Brussels officials to complain privately that Cyprus acts at times as a "Trojan donkey" for Moscow inside the European Union since it joined in 2004. 
 
 Banks in Cyprus are to remain shut on Wednesday to avoid a bank run. The island's stock exchange will also be closed on Wednesday. ($1 = 0.7760 euros) 
 
 (Additional reporting by Lionel Laurent, Noah Barkin, Gilbert Kreijger, Adrian Croft, Steven C. Johnson and Robin Emmott and Michael Shields; Writing by Paul Taylor/Mike Peacock/Matt Robinson; Editing by Giles Elgood)
– The proposed bank deposit tax that has enraged Cypriots and spooked bank customers across Europe looks likely to die today, even with a last-minute tweak that would spare the smallest savers, Reuters reports. Draft legislation sent to parliament amends the previous plan by exempting accounts containing less than about $26,000 from the tax, reports the Wall Street Journal. The other levies—6.75% on all deposits under $131,000 and 9.9% over that amount—would not be raised to make up for the lost revenue, meaning the levy wouldn't generate the $7.6 billion required by the IMF and eurozone partners, notes Reuters. Still, a government rep says parliament remains unlikely to pass the levy even with the change, and could punt on a vote if it becomes clear there's no chance of passage. Meanwhile, the island's banks will not reopen until Thursday at the earliest, CNN reports. EU officials insist that there is no chance of a similar levy being imposed on other nations, but the Cyprus mess has raised fears of bank runs in other countries. "If you're a small depositor in Cyprus, you'll tell yourself that it would have been better to keep your money under the carpet than in a bank," says a French bank executive. "And if you're a Greek, a Spaniard, or an Italian, well, you'll tell yourself that you might be next." This isn't the first time European countries have moved to tax bank deposits, the AP adds. Italy imposed a tax on all bank accounts to keep its currency afloat in the '90s, but the rate was just 0.06%.