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[1]
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
