European Politico-economics QA Mega-thread - Page 184

On July 10 2015 21:07 WhiteDog wrote:

They must be at the beach.

Greece’s reform proposals are strikingly similar to the ones Greek voters overwhelmingly rejected at a referendum only earlier this week. Yet, there are a few differences, some crucial and others less substantial.

Here is a list of where the two proposals converge and where they still stand apart:

Financing and Debt

Greece is asking for three-year loans of at least 53.5 billion euros ($59.9 billion) to cover its financing needs between 2015 and 2018. It is also seeking debt restructuring and reprofiling of its long-term debt due after 2022. The earlier proposals were in return for a five-month extension of an existing bailout program for loans of as much 15.5 billion euros and didn’t involve any debt restructuring. Fiscal targets remain the same with primary budget surplus seen at 1, 2, 3, and 3.5 percent of the gross domestic product between 2015 and 2018, even amid signs that the economy may have deteriorated under capital controls and shuttered banks for nearly two weeks.

Tax Reforms

With few exceptions, the Greek government adopts the creditors’ proposal on sales and corporate tax rates. The government is seeking to eliminate sales tax discounts on islands gradually by the end of 2016 instead of immediately, starting higher-income islands that are popular tourist destinations. It also seeks to keep hotels under a reduced 13 percent rate instead of the standard 23 percent.

Pension Reforms

The government is in agreement with the creditors in eliminating early retirement benefits and envisages savings of 0.25-0.50 percent of GDP in 2015 and 1 percent of GDP in 2016, effective from July 1, in line with demands under the earlier proposals. It proposes implementing a “zero-deficit” clause for supplementary and lump-sum pension funds, adopted in 2012, from October instead of immediately. While it agrees to phase out a supplementary allowance for low pensions by the end of December 2019, it wants to start phasing-out these benefits from March 2016 instead of starting immediately.

Fiscal and Structural Measures

Greece wants to increase advanced income tax payment on corporate income to 100 percent and gradually for individual businesses by the end of 2017, as part of steps to close loopholes for tax avoidance. It also proposes to eliminate preferential tax treatment for farmers by the end end of 2017. The creditors wanted these steps to be implemented by the end of 2016.

The government appears to backtrack on its own earlier proposals for military spending cuts, offering to reduce spending by 100 million euros in 2015 and 200 million euros in 2016. It had earlier suggested to cut military spending by 200 million euros in 2016 and 400 million euros in 2017. The creditors have sought an immediate cut in annual military spending by 400 million euros.

It offers instead to extend implementation of a luxury tax on recreational vessels in excess of five meters instead of in excess of 10 meters.

Labor Reform

Government insists to legislating changes to collective bargaining agreements this fall; creditors don’t want any changes to already agreed labor framework and demand that any changes be negotiated with the three creditor institutions first -- the European Central Bank, the International Monetary Fund and the EU.
Privatizations

This is where the government appears to fully adopt the creditors’ demand for all agreed sales of state assets to proceed, including transferring the state’s shares in the Hellenic Telecommunication Organization SA to the asset sales fund and selling regional airports under terms already agreed with a venture led by Fraport AG, the winning bidder already selected by the previous government.

Imagine yourself inside a hospital, facing a matter of life and death, yet the doctors have ignored you and expect a bribe. What do you do?

In Greece, when people are facing a life at risk, all they can do is pay ‘fakelaki’, small bribes to doctors. There seems to be no alternatives. Without ‘fakelaki’ or ‘little envelope’ stuffed with bribes, you can’t get treatment in hospitals, or secure a driving licence.

Individuals and companies can even bribe inspectors and evade taxes due to a poor system of tax inspections in Greece, says Transparency International, the global coalition against corruption. According to the data of Transparency International, the average bribe to a public servant cost 1,228 euros (1,372 dollars) in 2012. A bribe to get a drivers licence tends to cost between 100 euros (111 dollars) and 300 euros (335 dollars), and to get surgery in a hospital can cost between 100 euros (111 dollars) and 30,000 euros (33,537 dollars).

‘Fakelaki’ has been a trend. These actions tend to go unpunished. Even if authorities were set up to encourage reports of corruption, there were only a few who had the courage to break the silence.

The Greek people have realised the problem. But can the weeds be taken out to make the country more fertile for growth?

On July 10 2015 20:56 c0ldfusion wrote:
Where are the Greeks in the thread?

Is there outrage? is there consignment?

On July 10 2015 22:40 Alcathous wrote:
So when someone comes and says this problem is extremely hard to solve, that's absurd and needs to be pointed out.
It is like saying the Israel-Palestine conflict is 'extremely complex', just because one side refuses to resolve it.