Two texts are in the works to try and smooth over differences between Athens and institutional creditors, as reported since last week, with European creditors and the IMF still disagreeing on the effect that a tax package -- including possible pension cuts -- worth 5.4 billion euros will have on Greek finances.
The IMF insists that the measures will not, after all, generate a 3.5-percent primary budget surplus by the end of 2018.
Following another lengthy meeting on Sunday, “open issues” that are still unresolved include the level of cuts to supplementary pensions; fiscal measures, especially indirect taxes, given that creditors want guaranteed revenue-generating hikes; and, the still drawn out negotiations over non-performing loans held by the country’s thrice recapitalized banks.
One indicative point of negotiations is the fact that creditors – now known as the “quartet” – insist on expanding the tax base downward, i.e. reducing the tax-free ceiling from 9,545 euros in annual income to 8K, whereas the government is proposing a figure of 9,050 euros, which would retain a deductible for incomes under 20K a year.
Moreover, the leftist government does not want to increase the VAT rate on utility bills, but instead to slap a higher tax on tobacco products, fuels, mobile telephony and even cable TV subscriptions. It views the former proposal as affecting the more economically weaker strata of society disproportionately.
