New package of tax measures proposed to the creditors

New package of tax measures proposed to the creditors

The government has forwarded to the country’s creditors its new package of proposals for measures aimed at plugging the fiscal gap up to 2018. The creditor representatives are processing those proposals and drafting lists with actions already implemented and those still pending in an effort to accelerate the bailout review process.

The Finance Ministry’s package of measures to cover the fiscal gap of 1 percent of gross domestic product, or 1.8 billion euros, by 2018 (as another 2 percent will be covered by income tax and social security reforms), includes mainly tax measures, while there are also some spending cuts.

In this context, the government is promoting tax increases for unleaded gasoline and natural gas.

However, Energy Minister Panos Skourletis promised there would be no tax hike on diesel.

Other proposals include a levy on pay TV, an increase in taxes on cell phone use, a reduction in defense spending, an increase in revenues from the Single Property Tax, or ENFIA (mainly for large properties), an increase in tobacco taxation, a hike in the car registration tax on imported used cars, and the taxation of Internet use. Sources also say the government is considering imposing a levy on bank checks too.

The target remains striking an agreement on new measures amounting to 2.5-3.5 percent of GDP (including changes in income taxation and the pension system), along with reaching a deal on the management of nonperforming loans and the creation of the new privatizations hyperfund by this Sunday.

The creditors have said that ideally all interventions should clear Parliament by the Eurogroup meeting scheduled for April 22 so that eurozone finance ministers are able to proceed to negotiations on the further lightening of the Greek state debt.

A European official commented on Tuesday in Brussels there is a good possibility of a deal within April ahead of both the spring convention of the International Monetary Fund and the April 22 Eurogroup. He warned however that if that opportunity is missed, the situation will then become very difficult.

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