In the run up to a meeting on Saturday June 27 in which EU leaders are set to meet once again to work out a deal for Greece, a blueprint for bailout conditions by its creditors has been leaked to the Financial Times. The country has been perpetually stuck in its eleventh hour, with a deal to unlock emerging funds to prevent a default yet to be concluded.
The structure of value added tax on goods has also caused friction
The leaked document, which outlines what economic reforms creditors wish to see before any new funds are extended to the debt ridden country, comes after Greece’s reform proposals were turned down recently. According to creditors, it was too heavy on taxes and light on spending cuts, making it too recessionary.
A major point of contention has been pension reforms. Greece, in its now discarded plan, proposed to raise the retirement age to 67 by the year 2025, while the leaked document shows that its creditors are pushing for Athens to raise the age of retirement by 2022.
The structure of value added tax on goods has also caused friction, with creditors initially pushing for a two tier VAT system to be implemented, with most goods falling under the higher tier of 23 percent added tax. The new document now shows creditors ceding to the Greek’s proposal for a three tiered VAT system, with certain goods and services such as books, medicines and theatre placed in a “super-reduced rate” of six percent. They also suggested corporate tax be raised from 26 to 28 percent, in contrast to Greece’s proposal to raise it to 29 percent.