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Athens Macedonian News Agency: News in English, 15-07-10
CONTENTS
[01] The Greek government's full proposal to the Eurogroup
[01] The Greek government's full proposal to the Eurogroup
The full proposal submitted by the Greek government to the Eurogroup
earlier on Thursday is the following:
"Greece: Prior Actions
Policy Commitments and Actions to be taken in consultation with
EC/ECB/IMF staff: 1. 2015 supplementary budget and 2016-19 MTFS
Adopt effective as of July 1, 2015 a supplementary 2015 budget and
a 2016–19 medium-term fiscal strategy, supported by a sizable and
credible package of measures. The new fiscal path is premised on a
primary surplus target of (1, 2, 3), and 3.5 percent of GDP in 2015, 2016,
2017 and 2018. The package includes VAT reforms (¶2), other tax policy
measures (¶3), pension reforms (¶4), public administration reforms
(¶5), reforms addressing shortfalls in tax collection enforcement (¶6),
and other parametric measures as specified below. 2. VAT reform
Adopt legislation to reform the VAT system that will be effective as of
July 1, 2015. The reform will target a net revenue gain of 1 percent of
GDP on an annual basis from parametric changes. The new VAT system will:
(i) unify the rates at a standard 23 percent rate, which will include
restaurants and catering, and a reduced 13 percent rate for basic food,
energy, hotels, and water (excluding sewage), and a super-reduced rate
of 6 percent for pharmaceuticals, books, and theater; (ii) streamline
exemptions to broaden the base and raise the tax on insurance; and (iii)
Eliminate discounts on islands, starting with the islands with higher
incomes and which are the most popular tourist destinations, except the
most remote ones. This will be completed by end-2016, as appropriate
and targeted fiscally neutral measures to compensate those inhabitants
that are most in need are determined. The new VAT rates on hotels and
islands will be implemented from October 2015. The increase of the
VAT rate described above may be reviewed at the end of 2016, provided
that equivalent additional revenues are collected through measures
taken against tax evasion and to improve collectability of VAT. Any
decision to review and revise shall take place in consultation with the
institutions. 3. Fiscal structural measures Adopt legislation
to: · close possibilities for income tax avoidance (e.g., tighten the
definition of farmers), take measures to increase the corporate income
tax in 2015 and require 100 percent advance payments for corporate income
and gradually for individual business income tax by 2017; phase out the
preferential tax treatment of farmers in the income tax code by 2017;
raise the solidarity surcharge; · abolish subsidies for excise on
diesel oil for farmers and better target eligibility to halve heating oil
subsidies expenditure in the budget 2016; · in view of any revision
of the zonal property values, adjust the property tax rates if necessary
to safeguard the 2015 and 2016 property tax revenues at €2.65 billion
and adjust the alternative minimum personal income taxation. ·
eliminate the cross-border withholding tax introduced by the installments
act (law XXXX/2015) and reverse the recent amendments to the ITC in
the public administration act (law XXXX/2015), including the special
treatment of agricultural income. · adopt outstanding reforms on
the codes on income tax, and tax procedures: introduce a new Criminal
Law on Tax Evasion and Fraud to amend the Special Penal Law 2523/1997
and any other relevant legislation, and replace Article 55, ¶s 1 and
2, of the TPC, with a view, inter alia, to modernize and broaden the
definition of tax fraud and evasion to all taxes; abolish all Code
of Book and Records fines, including those levied under law 2523/1997
develop the tax framework for collective investment vehicles and their
participants consistently with the ITC and in line with best practices
in the EU. · adopt legislation to upgrade the organic budget law to:
(i) introduce a framework for independent agencies; (ii) phase out ex-ante
audits of the Hellenic Court of Auditors and account officers (ypologos);
(iii) give GDFSs exclusive financial service capacity and GAO powers to
oversee public sector finances; and (iv) phase out fiscal audit offices by
January 2017. · increase the rate of the tonnage tax and phase out
special tax treatments of the shipping industry. By September 2015,
(i) simplify the personal income tax credit schedule; (ii) re-design and
integrate into the ITC the solidarity surcharge for income of 2016 to
more effectively achieve progressivity in the income tax system; (iii)
issue a circular on fines to ensure the comprehensive and consistent
application of the TPC; (iv) and other remaining reforms as specified in
¶9 of the IMF Country Report No. 14/151. On health care, effective
as of July 1, 2015, (i) re-establish full INN prescription, without
exceptions, (ii) reduce as a first step the price of all off-patent drugs
to 50 percent and all generics to 32.5 percent of the patent price,
by repealing the grandfathering clause for medicines already in the
market in 2012, and (iii)) review and limit the prices of diagnostic
tests to bring structural spending in line with claw back targets;
and (iv) collect in the full the 2014 clawback for private clinics,
diagnostics and pharmaceuticals, and extend their 2015 clawback ceilings
to 2016. Launch the Social Welfare Review under the agreed terms
of reference with the technical assistance of the World Bank to target
savings of ½ percent of GDP which can help finance a fiscally neutral
gradual roll-out of the GMI in January 2016. Adopt legislation to:
· reduce the expenditure ceiling for military spending by €100
million in 2015 and by €200 million in 2016 with a targeted set of
actions, including a reduction in headcount and procurement;
· introduce reform of the income tax code, [inter alia covering capital
taxation], investment vehicles, farmers and the self- employed, etc.;
· raise the corporate tax rate from 26% to 28%; · introduce tax on
television advertisements; · announce international public tender
for the acquisition of television licenses and usage related fees of
relevant frequencies; and · extend implementation of luxury tax on
recreational vessels in excess of 5 meters and increase the rate from
10% to 13%, coming into effect from the collection of 2014 income taxes
and beyond; · extend Gross Gaming Revenues (GGR) taxation of 30%
on VLT games expected to be installed at second half of 2015 and 2016;
· generate revenues through the issuance of 4G and 5G licenses.
We will consider some compensating measures, in case of fiscal
shortfalls: (i) Increase the tax rate to income for rents, for annual
incomes below €12,000 to 15% (from 11%) with an additional revenue
of €160 million and for annual incomes above €12,000 to 35% (from
33%) with an additional revenue of €40 million; (ii) the corporate
income tax will increase by an additional percentage point (i.e. from 28%
to 29%) that will result in additional revenues of €130 million.
4. Pension reform The Authorities recognise that the pension
system is unsustainable and needs fundamental reforms. This is why
they will implement in full the 2010 pension reform law (3863/2010),
and implement in full or replace/adjust the sustainability factors for
supplementary and lump-sum pensions from the 2012 reform as a part of
the new pension reform in October 2015 to achieve equivalent savings
and take further steps to improve the pension system. Effective
from July 1, 2015 the authorities will phase-in reforms that would
deliver estimated permanent savings of ¼-½ percent of GDP in 2015
and 1 percent of GDP on a full year basis in 2016 and thereafter by
adopting legislation to: · create strong disincentives to early
retirement, including the adjustment of early retirement penalties,
and through a gradual elimination of grandfathering to statutory
retirement age and early retirement pathways progressively adapting 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; · adopt legislation so that withdrawals from the Social
Insurance Fund will incur an annual penalty, for those affected by the
extension of the retirement age period, equivalent to 10 percent on
top of the current penalty of 6 percent; · integrate into ETEA all
supplementary pension funds and ensure that, starting January 1, 2015,
all supplementary pension funds are only financed by own contributions;
· better target social pensions by increasing OGA uninsured pension;
· Gradually phase out the solidarity grant (EKAS) for all pensioners
by end-December 2019. This shall be legislated immediately and shall
start as regards the top 20% of beneficiaries in March 2016 with the
modalities of the phase out to be agreed with the institutions; ·
freeze monthly guaranteed contributory pension limits in nominal terms
until 2021; · provide to people retiring after 30 June 2015 the
basic, guaranteed contributory, and means tested pensions only at the
attainment of the statutory normal retirement age of currently 67 years;
· increase the health contributions for pensioners from 4% to 6%
on average and extend it to supplementary pensions; · phase out all
state-financed exemptions and harmonize contribution rules for all pension
funds with the structure of contributions to IKA from 1 July 2015;
Moreover, in order to restore the sustainability of the pension system,
the authorities will by 31 October 2015, legislate further reforms to
take effect from 1 January 2016; (i) specific design and parametric
improvements to establish a closer link between contributions and
benefits; (ii) broaden and modernize the contribution and pension base
for all self-employed, including by switching from notional to actual
income, subject to minimum required contribution rules; (iii) revise
and rationalize all different systems of basic, guaranteed contributory
and means tested pension components, taking into account incentives
to work and contribute; (iv) the main elements of a comprehensive SSFs
consolidation, including any remaining harmonization of contribution and
benefit payment rules and procedures across all funds; (v) abolish all
nuisance charges financing pensions and offset by reducing benefits or
increasing contributions in specific funds to take effect from 31 October
2015; and (vi) harmonize pension benefit rules of the agricultural fund
(OGA) with the rest of the pension system in a pro rata manner, unless
OGA is merged into other funds. The consolidation of social insurance
funds will take place by end 2017. In 2015, the process will be activated
through legislation to consolidate the social insurance funds under a
single entity and the operational consolidation will have been completed
by 31 December 2016. Further reductions in the operating costs and a more
effective management of fund resources including improved balancing
of needs between better-off and poorer-off funds will be actively
encouraged. The authorities will adopt legislation to fully offset
the fiscal effects of the implementation of court rulings on the 2012
pension reform. In parallel to the reform of the pension system,
a Social Welfare Review will be carried out to ensure fairness of the
various reforms. The institutions are prepared to take into account
other parametric measures within the pension system of equivalent effect
to replace some of the measures mentioned above, taking into account
their impact on growth, and provided that such measures are presented
to the institutions during the design phase and are sufficiently
concrete and quantifiable, and in the absence of this the default
option is what is specified above. 5. Public Administration,
Justice and Anti Corruption Adopt legislation to: · reform the
unified wage grid, effective 1 January, 2016, setting the key parameters
in a fiscally neutral manner and consistent with the agreed wage bill
targets and with comprehensive application across the public sector,
including decompressing the wage distribution across the wage spectrumin
connection with the skill, performance and responsibility of staff. (The
authorities will also adopt legislation to rationalise the specialised
wage grids, by end-November 2015); · align non-wage benefits such
as leave arrangements, per diems, travel allowances and perks, with best
practices in the EU, effective 1 January 2016; · establish within the
new MTFS ceilings for the wage bill and the level of public employment
consistent with achieving the fiscal targets and ensuring a declining
path of the wage bill relative to GDP until 2019; · hire managers and
assess performance of all employees (with the aim to complete the hiring
of new managers by 31 December 2015 subsequent to a review process)
· introduce a new permanent mobility scheme applied by Q4 2015. The
scheme will promote the use of job description and will be linked with an
online database that will include all current vacancies. Final decision
on employee mobility will be taken by each service concerned. This will
rationalize the allocation of resources as well as the staffing across
the General Government. · reform the Civil Procedure Code, in line
with previous agreements; introduce measures to reduce the backlog of
cases in administrative courts; work closely with European institutions
and technical assistance on e-justice, mediation and judicial statistics
· strengthen the governance of ELSTAT. It shall cover (i) the
role and structure of the Advisory bodies of the Hellenic Statistical
System, including the recasting of the Council of ELSS to an advisory
Committee of the ELSS, and the role of the Good Practice Advisory
Committee (GPAC); (ii) the recruitment procedure for the President of
ELSTAT, to ensure that a President of the highest professional calibre
is recruited, following transparent procedures and selection criteria;
(iii) the involvement of ELSTAT as appropriate in any legislative or other
legal proposal pertaining to any statistical matter; (iv) other issues
that impact the independence of ELSTAT, including financial autonomy,
the empowerment of ELSTAT to reallocate existing permanent posts and
to hire staff where it is needed and to hire specialised scientific
personnel, and the classification of the institution as a fiscal policy
body in the recent law 4270/2014; role and powers of Bank of Greece in
statistics in line with European legislation. · Publish a revised
Strategic Plan against Corruption by 31 July 2015. Amend and implement
the legal framework for the declaration of assets and financing of the
political parties and adopt legislation insulating financial crime
and anti-corruption investigations from political intervention in
individual cases. Moreover, in collaboration with the OECD,
the Authorities will: · Strengthen controls in public entities and
especially SOEs. Empower the Line Ministries to perform robust audit
and control inspections to supervised entities including SOEs.
· Strengthen controls and internal audit processes in high spending
Local Government Institutions and their supervised legal entities.
· Strengthen controls in public and private investment cases funded
either by national or co-funded by other sources, public works and
public procurement (e.g. in health sector, SDIT). · Strengthen
transparency and control processes and skills in tax and customs
authorities. · Assess major risks in the public procurement cycle,
taking in consideration the recent developments (Central Purchasing and
e-Procurement: KHMDHS and ESHDHS) and the need to have a clear governance
framework. Develop strategy according to the assessment(Q4 2015)
· Implement strategy to mitigate public procurement risks.(Q1 2016)
· Assess 2 specific sectors, Health and Public Works in order to
understand the existing constrains related to corruption and waste risks
and propose measures to address them. Develop and implement strategy. (Q4
2015) 6. Tax administration Take the following actions to:
· Adopt legislation to establish an autonomous revenue agency, that
specifies: (i) the agency's legal form, organization, status, and scope;
(ii) the powers and functions of the CEO and the independent Board of
Governors; (iii) the relationship to the Minister of Finance and other
government entities; (iv) the agency's human resource flexibility and
relationship to the civil service; (v) budget autonomy, with own GDFS
and a new funding formula to align incentives with revenue collection
and guarantee budget predictability and flexibility; (vi) reporting
to the government and parliament; and (vii) the immediate transfer of
all tax- and customs-related capacities and duties and all tax- and
customs-related staff in SDOE and other entities to the agency. ·
on garnishments, adopt legislation to eliminate the 25 percent ceiling on
wages and pensions and lower all thresholds of €1,500 while ensuring
in all cases reasonable living conditions; accelerate procurement of IT
infrastructure to automatize e-garnishment; improve tax debt write-off
rules; remove tax officers' personal liabilities for not pursuing old
debt; remove restrictions on conducting audits of tax returns from 2012
subject to the external tax certificate scheme; and enforce if legally
possible upfront payment collection in tax disputes. · amend (i) the
2014–15 tax and SSC debt instalment schemes to exclude those who fail
to pay current obligations and introduce a requirement for the tax and
social security administrations to shorten the duration for those with
the capacity to pay earlier and introduce market-based interest rates;
the LDU and KEAO will assess by September 2015 the large debtors with tax
and SSC debt exceeding €1 million (e.g. verify their capacity to pay and
take corrective action) and (ii) the basic instalment scheme/TPC to adjust
the market-based interest rates and suspend until end-2017 third-party
verification and bank guarantee requirements. · adopt legislation
to accelerate de-registration procedures and limit VAT re-registration
to protect VAT revenues and accelerate procurement of network analysis
software; and provide the Presidential Decree needed for the significantly
strengthening the reorganisation of the VAT enforcement section in
order to strengthen VAT enforcement and combat VAT carousel fraud. The
authorities will submit an application to the EU VAT Committee and prepare
an assessment of the implication of an increase in the VAT threshold
to €25.000. · combat fuel smuggling, via legislative measures for
locating storage tanks (fixed or mobile); · Produce a comprehensive
plan with technical assistance for combating tax evasion which includes
(i) identification of undeclared deposits by checking bank transactions
in banking institutions in Greece or abroad, (ii) introduction of a
voluntary disclosure program with appropriate sanctions, incentives and
verification procedures, consistent with international best practice,
and without any amnesty provisions (iii) request from EU member states
to provide data on asset ownership and acquisition by Greek citizens,
(iv) renew the request for technical assistance in tax administration
and make full use of the resource in capacity building, (v) establish a
wealth registry to improve monitoring. · develop a costed plan
for the promotion of the use of electronic payments, making use of the
EU Structural and Investment Fund; · Create a time series database
to monitor the balance sheets of parent-subsisdiary companies to improve
risk analysis criteria for transfer pricing 7. Financial sector
Adopt: (i) amendments to the corporate and household insolvency laws
including to cover all debtors and bring the corporate insolvency law in
line with the OCW law; (ii) amendments to the household insolvency law to
introduce a mechanism to separate strategic defaulters from good faith
debtors as well as simplify and strengthen the procedures and introduce
measures to address the large backlog of cases; (iii) amendments to
improve immediately the judicial framework for corporate and household
insolvency matters; (iv) legislation to establish a regulated profession
of insolvency administrators, not restricted to any specific profession
and in line with good cross-country experience; (v) a comprehensive
strategy for the financial system: this strategy will build on the
strategy document from 2013, taking into account the new environment and
conditions of the financial system and with a view of returning the banks
in private ownership by attracting international strategic investors and
to achieve a sustainable funding model over the medium term; and (vi) a
holistic NPL resolution strategy, prepared with the help of a strategic
consultant. 8. Labour market Launch a consultation process to
review the whole range of existing labour market arrangements, taking
into account best practices elsewhere in Europe. Further input to the
consultation process described above will be provided by international
organisations, including the ILO. The organization and timelines shall
be drawn up in consultation with the institutions. In this context,
legislation on a new system of collective bargaining should be ready by Q4
2015. The authorities will take actions to fight undeclared work in order
to strengthen the competitiveness of legal companies and protect workers
as well as tax and social security revenues. 9. Product market
Adopt legislation to: · implement all pending recommendations of the
OECD competition toolkit I, except OTC pharmaceutical products, starting
with: tourist buses, truck licenses, code of conduct for traditional
foodstuff, eurocodes on building materials, and all the OECD toolkit
II recommendations on beverages and petroleum products; · In order
to foster competition and increase consumer welfare immediately launch
a new competition assessment, in collaboration and with the technical
support of the OECD, on wholesale trade, construction, e-commerce and
media. The assessment will be concluded by Q1 2016.The recommendations
will be adopted by Q2 2016. · open the restricted professions of
engineers, notaries, actuaries, and bailiffs and liberalize the market
for tourist rentals ; · eliminate non-reciprocal nuisance charges
and align the reciprocal nuisance charges to the services provided;
· reduce red tape, including on horizontal licensing requirements of
investments and on low-risk activities as recommended by the World Bank,
and administrative burden of companies based on the OECD recommendations,
and (ii) establish a committee for the inter-ministerial preparation of
legislation. Technical assistance of the World Bank will be sought to
implement the easing of licensing requirements. · design electronic
one-stop shops for businesses through analysing information obligations
businesses have to comply with, structuring them accordingly and
helping to design a project on developing the necessary ICT tools and
infrastructure (Q3 2015). Setting up the institutional & co-ordination
structure, identification of the business life events to be included,
identification and mapping of information obligations & administrative
procedures and training of officials (Q4 2015). Launch (Q1 2016)
· adopt the reform of the gas market and its specific roadmap,
and implementation should follow suit. · take irreversible steps
(including announcement of date for submission of binding offers) to
privatize the electricity transmission company, ADMIE, or provide by
October 2015 an alternative scheme, with equivalent results in terms of
competition, in line with the best European practices to provide full
ownership unbundling from PPC, while ensuring independence. On
electricity markets, the authorities will reform the capacity payments
system and other electricity market rules to avoid that some plants are
forced to operate below their variable cost, and to prevent the netting
of the arrears between PPC and market operator; set PPC tariffs based on
costs, including replacement of the 20% discount for HV users with cost
based tariffs; and notify NOME products to the European Commission. The
authorities will also continue the implementation of the roadmap to
the EU target model prepare a new framework for the support of renewable
energies and for the implementation of energy efficiency and review energy
taxation; the authorities will strengthen the electricity regulator's
financial and operational independence; 10. Privatization · The
Board of Directors of the Hellenic Republic Asset Development Fund will
approve its Asset Development Plan which will include for privatisation
all the assets under HRDAF as of 31/12/2014; and the Cabinet will
endorse the plan. · To facilitate the completion of the tenders,
the authorities will complete all government pending actions including
those needed for the regional airports, TRAINOSE, Egnatia, the ports
of Pireaus and Thessaloniki and Hellinikon (precise list in Technical
Memorandum). This list of actions is updated regularly and the Government
will ensure that all pending actions are timely implemented. ·
The government and HRADF will announce binding bid dates for Piraeus and
Thessaloniki ports of no later than end-October 2015, and for TRAINOSE
ROSCO, with no material changes in the terms of the tenders. ·
The government will transfer the state's shares in OTE to the HRADF.
· Take irreversible steps for the sale of the regional airports at
the current terms with the winning bidder already selected."
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