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Greece debt crisis: 11 keypoints in Alexis Tsipras’s cash-for-reform proposals

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Greece presented new reform proposals on Monday which its euro zone partners cautiously welcomed as a possible basis for an agreement to unlock bailout funds needed to avert a possible debt default.

Here is a summary of the proposal as spelled out by Greek government officials.

1) PENSIONS

Early retirement to be curbed gradually from 2016 to 2025, but exemptions for some specific categories to be maintained, including for arduous professions and mothers with disabilities.

A special benefit for some low-income pensioners, amounting to between 57 to 230 euros ($64.66 to $260.89) a month to remain but to be replaced from 2020 by new protection framework for low pensions. This is a key point of friction between Greece and its lenders, who wanted it scrapped.

2) VAT

Greece to keep three value added tax rates of 23 percent, 13 percent and 6 percent. Electricity and restaurants to be taxed at 13 percent instead of being raised to 23 percent, as lenders had demanded, while medicines to be cut to 6 percent rather than raised to 11 percent as sought by lenders. Officials said lenders were asking for two rates of 11 percent and 23 percent.

3) TAX HIKE FOR HIGH EARNERS

Solidarity tax for higher income earners (revenues above 50,000 euros ($56,710) to be increased, while lowering the tax for revenues below 30,000 euros. It introduces a solidarity tax of 8 percent on revenues above 500,000 euros.

4) CORPORATE, LUXURY TAX HIKES

Tax plans to include: a) a special levy of 12 percent on businesses that post a profit of over 500,000 euros; b) Increases in luxury tax on pools, planes, big cars and private boats over 10 meters (33 feet); c) a tax on gambling slot machines (VLTs).

5) PRIVATISATIONS

Privatisations to impose a minimum amount of investment, a commitment by investors to promote the local economy and a participation of public equity.

The transfer of Greece’s state equity in Greek telecoms operator to the country’s privatisation agency will not be part of the lenders’ prior actions.

Greece will not privatise its power grid operator (ADMIE) nor its dominant power utility PPC, as requested by creditors.

6) PUBLIC SECTOR WAGES

No cuts to public sector wages from levels at end-2014.

7) SPENDING CUTS

Cut defence spending by 200 million euros.

8) PRIMARY BUDGET SURPLUS

Primary budget surplus of 1 percent in 2015 and 2 percent in 2016, compared with 3 percent and 4.5 percent agreed to by previous Greek governments.

9) BONDS

Greece repeated demand for euro zone to lend it money to buy back 27 billion euros of its bonds from European Central Bank – effectively rolling-over the debt on more favourable terms.

10) INVESTMENT

Greece wants deal to include financing of infrastructure and new technologies through an investment package from the European Commission and the European Investment Bank.

11) NUMERICAL TARGETS

According to leaked proposals on Greek websites, Greece also planned to increase pension contributions to cash in 605 million euros this year and 1.56 billion euros next year.

Spending cuts and tax revenues would produce budget measures equivalent to 2.69 billion euros or 1.51 percent of GDP this year and 5.2 billion euros or 2.87 percent of GDP in 2016, up from 1.99 billion or 1.1 percent of GDP and 3.58 billion euros or 2 percent of GDP previously. ($1 = 0.8817 euros)

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