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Saturday, 9 July 2016

Greece and the IMF - Labour reforms, action on closed professions

From eKathimerini 

From IMF Report, May 2016:

Why does Greece require further adjustment? Without further measures, Greece will fall back into primary deficit over the medium run (of around 1 percent of GDP), with attendant consequences for debt. This is due to several factors:

- First, revenue is expected to decline relative to GDP, as: (i) the recovery is expected to rely on investment and exports, which are not tax rich; (ii) almost half of social contributions (e.g. self employed) are not linked to income, and property taxes are not linked to market prices; and (iii) one-off revenues from bank liquidity support will taper off.

- Second, spending pressures are likely to re-emerge, reflecting the fact that past spending cuts have not been supported by reforms. Spending on goods and services fell to 16 percent of primary spending (lower than its pre-crisis level of 19 percent and the euro-area average of 22 percent). Health spending has been severely compressed to 4½ percent of GDP, which is below euro area average of 7 percent of GDP, despite the fact that Greece faces one of the highest old-age dependency ratios.

 - The pension system is unaffordable and unsustainable. Greece’s current spending on the pension system is by far the highest in the euro-area (17½ percent of GDP), with annual transfers to the system of around 10 percent (2½ in the euro-area). This reflects very generous pensions to existing retirees (as noted below, the recent reform aims to address this problem over the long run by reducing benefits of future retirees).

- The tax system offers a large implicit tax-free threshold which exempts more than half of wage and pension earners from income tax (compared to 9 percent euro-area average). This leads to a highly skewed income tax distribution, with the top decile contributing 60 percent of the tax revenue. Consequently, collection rates have been declining steadily despite efforts to strengthen tax administration, and tax debt has reached 50 percent of GDP, the largest in the euro-area.

More developments:

From Keep Talking Greece - Commission suspends EU Funds due to “cartels” in Greece’s construction sector - "The European Commission temporary suspended all projects funded through the European Regional Developments Funds for the period 2014-2020 claiming there is a suspicion that a construction cartel has been exploiting the funds flowing into Greece".

Η ανακοίνωση της ελληνικής κυβέρνησης, περί “καρτέλ στον τομέα των κατασκευών” οδήγησε την Κομισιόν σε προσωρινή διακοπή των κοινοτικών κονδυλίων προς την Ελλάδα. NewsIt

Property Tax Changes - Αλλάζουν τα πάντα στη φορολογία των ακινήτων, MSN/

Ο Γιούνκερ διέκοψε τα κοινοτικά κονδύλια προς την Ελλάδα - “Τυπική διαδικασία” λέει η Κομισιόν

Ο Γιούνκερ διέκοψε τα κοινοτικά κονδύλια προς την Ελλάδα - “Τυπική διαδικασία” λέει η Κομισιόν

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