Greece's latest proposals to reach a debt deal with its creditors are focused on value-added tax (VAT) rates, early retirement measures and tax increases, which aim to cover a good part of the country's budgetary gap, Greek press reported Monday. The new proposals that are being examined in Brussels ahead of an emergency summit of eurozone leaders later on Monday seek to close a gap of 900 million euros between the creditors' demands for savings in the 2016 budget and the last offer Greece's leftist government made, which was rejected, according to the financial daily Naftemporifi. A European source in Brussels told Agence France-Presse that the Greeks have made proposals on pensions and defense spending, with some "movement" on VAT still needed.
The proposed adjustments to VAT could bring some 2 billion euros in additional revenue to state coffers, likewise for the proposals on pensions, Neftemporiki reported. Several newspapers, including Ta Nea and Ethnos, said that Greece would be prepared to raise the VAT on hotel stays - a key rate for tourism - from 6.5 percent to 13 percent, while raising the VAT on restaurants from 13 percent to 23 percent has not been resolved. At the same time Greece has maintained the 13 percent VAT rate on electricity, a red line for the anti-austerity government. Athens has also accepted to impose the lowest VAT rate of 6 percent only on medicines, books and theater tickets. On pensions, eliminating early retirement would begin in 2016, rather than progressively. Supplementary pensions above 1,000 euros, while rare, would be cut.
More tax hikes, after five years of raising rates, have also been proposed for business profits of 500,000 euros, instead 1 million as originally planned, and incomes over 30,000 euros. In previous proposals there were measures to improve the collection of VAT and taxes and to fight corruption. The leaders of the 19 eurozone countries are set to hold an emergency summit in Brussels to consider Athens's latest proposals and possibly open a way to end the deadlock and unblock 7.2 billion euros in Greece's remaining bailout funds.