Greek government: We covered half the distance on the issue of primary surpluses and expects the institutions to meet it half way

The Greek government has covered half the distance on the issue of primary surpluses and expects the institutions to meet it half way, government sources said on Tuesday, adding that Athens has proposed a primary surplus of 0.75 pct for 2015 and 1.75 pct for 2016.

The sources also said that in the new proposals sent to the institutions on Monday, revising a 47-page proposal presented last week, the government has hiked the medium VAT rate to 12 pct. The initial proposals called for a medium VAT rate of 11 pct.

The government has also asked the creditors for a clear commitment outlining when and how there will be a settlement of Greece’s debt.

On the basis of the revised proposals from the Greek side, there would be three VAT rates in the country: a low rate of 6.5 pct reserved for pharmaceuticals, books and theatre tickets, a medium rate of 12 pct for newspapers, periodicals, fresh and staple foodstuffs, water and electricity, hotels and restaurants, and a high rate of 23 pct for all other goods and services.

Still unclear are the government’s plans with respect to the VAT rate on Greek islands, which currently enjoy low VAT to offset the handicaps of island life. There have been thoughts within the government that this lower rate should remain but equivalent measures must be found instead, which makes this difficult.