Greece includes pension reforms, VAT in new proposal

Athens, July 10 (IANS) A settlement proposal sent to creditors has been published by the Greek government and includes reforms in pension and value-added tax (VAT) system.

According to the proposal issued on Thursday, Prime Minister Alexis Tsipras’ government offered to cut spending on pensions by 0.25 to 0.50 percent of its gross domestic product in 2015 and one percent from 2016 onwards, EFE news agency reported.

The proposal raises restaurant VAT from 13 percent to 23 percent and reduces the minimum tax rates for drugs, books and theatre, from 6.5 percent to 6 percent.

The pension reforms would progressively adapt “to the limit of statutory retirement age of 67 years, or 62 and 40 years of contributions by 2022, applicable for all those retiring (except arduous professions, and mothers with children with disability) with immediate application,” the proposal added.

It also increases health contributions for pensioners from four percent to six percent and proposes to gradually “phase out the solidarity grant (EKAS) for all pensioners by end-December 2019.”

VAT will be charged at 13 percent for basic food, hotels, energy and water, and 23 percent for the rest.

The 30 percent discount on VAT tariffs in Greek islands will be eliminated starting October 2015 for the richer islands, with higher tourist footfall.

The process will complete in late 2016 with fiscal measures to compensate residents with greater necessities, while new VAT rate for hotels will be implemented starting October 2015.

The plan also includes a rise in corporate tax from 26 percent to 28 percent, and “legislation on a new system of collective bargaining should be ready” by the last quarter of 2015.

The government also commits to reforms in public administration and judicial system to combat corruption.

 

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