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Pensions, tax, budget reforms on which the Greeks could renegotiate

HOME ECONOMY SITUATION
- By Marie Bartnik , Marine Rabreau
- Update on 06/07/2015 at 0:19
- Published on 06/29/2015 at 13:33

FOCUS - The Greeks should vote against the reform proposals made by the country's creditors on June 25. But if the talks resume, as suggested by the Greek leaders, this plan will serve as a roadmap. Pensions, tax, primary surplus ... Here, point by point, the measures recommended by the IMF, the EU and the ECB.

PUBLICITY

The Greeks would say "no" to new savings measures proposed on June 25 by the Europeans in exchange for financial extension. A plan that the Eurogroup has considered obsolete after the announcement of the referendum since negotiations were suspended. If the talks resume, as suggested by the Greek leaders, this plan will serve as a roadmap.

That however it contains that has bristled at that point the Greek government? Explanations.

• Pension reform

The draft agreement contains several components, most of which are conflicting pension reform and the rise in VAT. To bring the system to equilibrium of Greek pensions (the pension expenditure weigh more than 17% of GDP, a figure unmatched in Europe), creditors indeed require the government of Alexis Tsipras it saves the equivalent of one percentage point of GDP on this post.

To do this, the European Commission, the ECB and the IMF are demanding several measures.Among them, the end of many early retirement, the immediate application of the retirement age to 67 years of decline (or 62 if the employee has contributed at least 40 years) already planned by previous reforms and suppression In December 2019, the premium paid to small pensions. The minimum pension for poor pensioners should be frozen until 2021 and raised the level of contributions. However, as reaffirmed by Jean-Claude Juncker on Monday , the plan foresees cuts in wages or in pensions or pensions.

• VAT

The VAT increase demanded by creditors is another black spot of the agreement that pushed the Greek government. Creditors wanted next Wednesday, the VAT rate jumps from 6% to 13% in hotels and 13% to 23% in catering, two key sectors for Greek tourism. Three VAT rates would be maintained at 6% (for medicines, books and theater tickets), 13% (for food, energy, water, and hotels), and 23% for other goods and services. Creditors also demanded that the VAT rebate from 30% currently enjoyed by the islands should be deleted. A casus belli. All these tax measures should also report the equivalent of 1% of GDP.

• Budget surplus

The creditors also want to see implemented various fiscal measures that would increase the Greek state resources, such as caps on military spending to 400 million euros, an increase of the tax on companies by 26% 28%, the introduction of a tax on TV advertising or a tax increase applicable to yachts over 10 meters. At these various taxes had to add a structural component, to strengthen the Greek tax system (and the creation of an independent agency to manage taxes) and to fight against fraud.

In total, the Greeks were thus achieving a primary budget surplus, that is to say outside debt burden by 1% in 2015, 2% in 2016, 3% in 2017 and 3.5% in 2018. concession on the part of the Commission, ECB and IMF, which still demanded recently that Greece will achieve the goal of 3.5% from 2015.

All these proposals, however, must evolve if the Greek government agrees to return to the negotiating table. German Chancellor reiterated Monday that it was "obviously prepared to resume discussions" with Alexis Tsipras. "Margins for negotiation exist," also said the European Commissioner for Economic Affairs, Pierre Moscovici. The ball is now in the camp of the Greeks.

• Public administration, justice, the fight against corruption.

It is proposed to reform as of 1 January 2016 the salary in the public sector (decentralization, greater consideration of individual performance, qualifications ...) and to strengthen the governance of the National Institute of Statistics (ELSTAT). As of July 31, it comes to implement and strengthen the framework for political financing activities (statement of sums paid, protection of investigations against "individual interventions," etc.).

• Financial sector

Creditors propose to amend laws on personal and corporate bankruptcies designed in particular to speed up judicial procedures, establish a better separation between cases of real or organized insolvency professionalize the commercial courts (eg regulate and supervise the profession judicial liquidator). For banks, the establishment of a "comprehensive strategy" to disengage the public guardianship and regain access to stable sources of private financing, addressing the issue of non-performing loans, etc. is envisaged.

• Labour market

Recommendations preclude any immediate further reduction in the minimum wage (684 euros per month). They call instead to redefine the framework of collective bargaining and dismissal procedures. Any change can not occur before the end of the year, without prior consultation of the social partners (claimed) and downstream from the European Commission, the ECB and the IMF.