Government meetings in Greece on Tuesday and Wednesday took place in the framework of an effort to find a solution that would satisfy the country’s international creditors from the European Commission, European Central Bank and International Monetary Fund while also ensuring that Greek “red lines” weren’t crossed.
It is believed that talks at a technical level have saturated with no further hope of convergence. Now eyes are turned to Prime Minister Alexis Tsipras who hopes to maneuvre a solution within May.
A plan presented by Tsipras, approved by the government council as Greece’s “final proposal”, includes privatizations and a long catalogue of fiscal measures so that a primary surplus can be achieved. These measures are included in the tax legislation that foresees a redistribution of the tax burden so that it is more fairly spread across society.
International creditors insist on reducing pensions and postponing the government’s initiatives for labor and social equity that have been flattened by bailouts in exchange for austerity. Now, the government appears ready to compromise on some issues such as early retirement or the gradual return of the basic wage but is not willing to retreat on issues it considers crucial, such as reductions to main and auxiliary pensions or group dismissals.
In the worst-case scenario the government leaves open the possibility of a standstill in payments to creditors rather than delays in the payment of wages and pensions. The next installments – worth 2-2.5 bln euros – are due to the IMF are in June.
An omnibus bill will be presented in parliament provided the ECB unlocks its canister for Greece to offer liquidity to the country through measures such as an increase to T-bonds or the use of profits worth 1.9 billion euros from bonds that are being held for Greece.
Meanwhile, Tsipras will meet with European leaders afresh in Riga at the sidelines of the European Council on Thursday and Friday. Tsipras hopes that the line followed by Merkel will prevail over the obstinent position of German Finance Minister Wolfgang Schaeuble.
Seven measures that the Greek government hopes will “lock” a deal
Left-wing Avgi newspaper presents seven measures:
– The continuation of a reduced joint property tax (ENFIA) with a drop in objective values at around 20-30%.
– Two VAT rates. A low one at 7% and high VAT at 18-19%. The 30% discount may continue at islands, however some products may be open to tax hikes.
– Mandatory use of credit cards for purchases over 70 euros. The measure may begin on a pilot basis from June 1.
– Provisions for a lump sum of taxation for those who have deposits that aren’t derived from declared income. The tax rate for these sums may range from 15-20%.
– Full independence to be given to the General Secretariat of Public Revenue.
– A special tax for the 500 wealthiest families.
– A lottery system for receipts on a monthly, half-yearly and annual rate using the receipt number as for the lucky draw.
– A duty for overnight stays at luxury lodgings at Aegean islands with over 3,100 and 4,100 residents. The rate will be 3-5% per night, ie 1-5 euros.
- Closure of outstanding tax cases for any period up to the end of 2014 without fines and surcharges.
