Europe

Greece debt deal: What's in government's latest proposals?

Pro-Euro protesters take part in a rally in front of the Parliament on June 22. 2015 in Athens, Greece. Image copyright Getty Images
Image caption Greece's future in the eurozone could depend on a deal being struck imminently with its creditors

Greece's government has days to secure a deal with the country's international creditors to unlock urgent bailout funds needed to stop it defaulting on its debts.

Leaked details of the latest proposal from Athens shows it aims to raise €7.9bn (£5.6bn; $8.86bn) in the next two years through tax hikes and spending cuts - much higher than previously offered.

Here is a breakdown of some of the main points in the government's plan being discussed in Brussels.


Primary surplus

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Image caption Greece says it will balance its books

The current proposal, put forward by Greek PM Alexis Tsipras, is believed to accept the creditors' targets for the primary budget surplus - the amount by which tax revenues exceed public spending excluding interest payments.

This is important because it determines how quickly and drastically changes must be introduced.

The lenders call for a surplus of 1% of Gross Domestic Product (GDP) this year, which analysts say would require a lot of austerity measures. They then want to see a surplus of 2% in 2016 and 3% in 2017 to reach 3.5% of GDP in 2018.

Greece had previously called for the yearly increase in primary budget surplus to be more gradual.

But after months of wrangling, the government on Monday agreed to the creditors' targets, which mean it will need to make cuts and raise taxes equal to 1.5% of GDP this year, and almost 2.9% in 2016.

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Pensions

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Image caption Pensioners held a rally against austerity measures in central Athens on Tuesday

After winning January's election on an anti-austerity platform, Greece's left-wing Syriza leaders described pension reforms as a "red line" they would not cross.

However commentators say this area is where the government has moved the most in the past week.

The latest proposal includes a stronger plan to curb early retirement. European Commission figures show Greeks retire earlier on average than many others in the EU, ramping up the country's pension spending.

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Media caption"Greeks were living a nightmare" - Pensioners react to the prospect of a deal

Meanwhile, the government is also suggesting increasing contributions to the main pension plan, as well as pensioners' contributions to health care.

So although Greece has avoided direct cuts to pensions paid, older people would still feel the effects of the reforms.

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Taxes

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Image caption The government wants to increase its luxury tax on pools, planes, big cars and private yachts

Despite the controversy surrounding pension reforms, the current budget proposal from Athens relies far more on raising taxes than cutting spending.

Greek taxpayers face "a daunting raft of obligations", according to Prokopis Hatzinikolaou in Greek newspaper Kathimerini.

The government has previously focused on cracking down on widespread tax evasion, but more recent proposals suggest targeting levies at the rich and wealthy companies.

The latest document follows in the same vein, featuring increased corporate and luxury taxes and increasing a one-time profits tax to 12% on all profits above €500m.


VAT

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Image caption Fewer products will be exempt from the highest VAT rate under the government's proposal

Lenders have been calling for a simpler VAT system - with a standard rate of 23%, and a reduced rate of 11% for essential items such as food and medicines. They also want exemptions for various products and regions, including Greek islands, to be eliminated.

However, the Greek government is proposing keeping its three-tier system with tax rates at 23%, 13% and 6%.

Fewer products would be exempt from the top rate, although the government has insisted that tax on electricity and the restaurant industry be kept at 13%.


Privatisation and other measures

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Image caption The privatisation of the Piraeus cargo port has been delayed

Although privatisation is a no-go for many of Syriza's grass-roots supporters, the party's leaders have made some concessions.

Plans to sell off the ports of Piraeus and Thessaloniki have already caused protests.

In its latest offer, the government reportedly promises to accelerate the process, although the projects included are unclear.

Greece will not privatise its power grid operator or main power utility as requested, according to Reuters.

But it is proposing to raise funds elsewhere, including a €200m cut in defence spending in 2016.

Crucially there does not appear to be any explicit reference to debt relief in the proposals, which may prove difficult for Mr Tsipras when seeking parliamentary approval on any deal.

End of an act, not the whole play