Lenders propose electricity VAT hike, to 23%, IPTO sale

The country’s lenders have proposed a VAT hike on electricity bills, to 23 percent from 13 present, the privatization of IPTO, the power grid operator, and social security fund cuts, as part of a five-page plan of terms that woud lead to a new bailout agreement.

According to the Greek government, the proposals are still at a staff-level stage. Certain government officials, including Prime Minister Alexis Tsipras, have already described the terms as not discussable.

Sources noted the VAT hike proposal would generate 1.8 billion euros in revenues for 2015, prompting significant energy-cost increases in the process. The proposals also include social security fund cuts measuring one percent of GDP for 2015 and 2016, as well as stopping EKAS (Social Solidarity Benefit for Pensioners) provisions until the end of 2015.

The lenders have also proposed that the ENFIA property tax, introduced last year by the previous administration, continue to be implemented, combined with maintenance of tax-authority property value levels as they stood prior to January 1, 2015, before certain reductions were made, to avoid missing out on 600 million euros in tax revenues.

Primary surplus targets set for the next four years – 1% in 2015, 2% in 2016, 3% in 2017, and 3.5% in 2018 – were viewed favorably by the Greek government.

Late last night, Prime Minister Alexis Tsipras made an announcement, disclosing some of the harsher proposals made, which highlighted the gap separating negotiating sides.

“The proposals brought back to the negotiating table, such as social solidarity cuts for low-income pensioners, or a ten-percent VAT hike on electricity, are proposals that provide no basis for discussion,” Tsipras remarked.