In literature, a pathetic fallacy is where the mood resembles the weather, and so it was in Greece this morning on the day of reckoning. Following a week of fear-mongering and speculation as to whether ATMs would be working and British plans to airlift tourists as an escape from angry Greek protestors, the rainy weather seemed like an anti-climax.
Speculation is mounting concerning the content of the 11th-hour proposals sent by the Radical Left Coalition (SYRIZA) government to Brussels on Sunday. Greece’s international creditors are forcing Athens to find funds to cover a 0.5% fiscal gap in the GDP. So far, creditors have remained firm in their demands for cuts to early retirement and VAT increases with the abolition of the low 6.5% rates.
A key to unlocking funds benchmarked for Greece could be Finance Minister Yanis Varoufakis’ proposal for instantaneous, horizontal cuts to funding decided upon by a special budget monitoring body set up to examine reforms applied by the Greek government.
By Sunday midnight, the constantly changing reforms were believed to have been set as follows:
* Three VAT categories instead of two that the institutions had proposed. Medicines will be included at the low 6-6.5% VAT rate whereas the Public Power Corporation and water board (EYDAP) would be at 13%.
* The transfer of products to higher VAT rates that could climb to 23% for dining and catering and 13% for hotels in an effort to yield public revenue worth 1.5 bln per annum. An abolition of the 30% lower rate for Aegean islands is expected to be applied. Greek proposals do not include a VAT hike in electricity.
* A new emergency contribution for businesses with profits over 500,000 euros in 2014 will apply for 2 years. Initially, the measure had been for companies that showed profits over 1-5mln euros.
* New indexes for the special solidarity contribution at 0.7% from 12,000 euros and 8% for salaries over 500,000 euros per annum.
* Taxes to television advertising with profits over 100 mln euros in 2015 and 100 mln euros in 2016.
* Taxes to 2-gaming to yield 35 mln euros for 2015 and 225 mln euros in 2016.
Other measures aimed at yielding 1.8 bln euros per annum include cuts to early pensions or alternatively withholding 16% of the rate. There will be cuts to high lump sum retirement packages. Insurance funds will be unified.
