The draft bill containing prerequisite measures agreed in Brussels on Monday has been submitted in Parliament and is expected to be approved by Wednesday evening. The controversial bill, which contains reforms in VAT and other taxes, has created major tension within SYRIZA.
Chapter 1 of the draft bill ratify the Eurosummit decision, chapter 2 includes a number of reforms and interventions in taxation, while the third chapter contains social insurance measures, including measures to curb early retirement.
Amongst the measures included in the bill is a much-debate three-tiered VAT reform. In the new VAT, medicine, books and theater tickets will have be taxed with a 6% rate; fresh food, energy, water and hotels will have a 13% rate, while all processed food, transportation services, restaurants, catering, medical services and all other products and services will have a 23% rate.
The bill controversially also abolishes a VAT discount in the Aegean islands, however remote islands will maintain the discount until 2016. Financially vulnerable island residents are to receive income support. Other tax reforms and changes in the bill include:
- Retroactively raising the solidarity tax as of the 1st of January 2015 from 0.7% to 0.8%, depending on the taxpayer’s income
- Increasing the luxury tax from 10% to 13%
- Increasing the tax rate of farmers from 13% to 26%
- Abolishing the fuel subsidy in agriculture
- Introducing stricter criteria for identifying as professional farmers
- Increase the corporate tax from 26% to 28%
- Increase the advance payment of corporate tax and professionals to 100%.
The draft bill [in Greek] is available online.
