New nonpaper by the Greek government, slamming EC President Juncker

The Greek government just released another nonpaper (in the same day!), this time hitting on statements made by President of the European Commission, Jean-Claude Juncker. You can find the original (in Greek) here, and the translated version below.

Non Paper, 29/06/2015

The institutions, through J. Cl. Juncker, argue that the government is not informing properly the public in a number of issues. Let us see one by one the points, in which, as claimed by Mr. Juncker, the Greek government is giving the wrong information.

1.There are no pension cuts” in the proposal of the institutions, says Mr. Juncker. A statement that caused the reaction even of Peter Spiegel – who is famous for his opinions: “Sorry, but this is not true,” he wrote, while in another tweet he noted that “the proposal of the creditors provides for cutting of the EKAS until December of 2019: This means pension cuts no matter what Juncker says.”

The proposal of the European Commission of course asks for pension cuts. Where else would the measures they ask lead anyways? These are:

  1. Gradual phasing out of EKAS for all the pensioners until the end of December 2019.”
  2. Increase of health contributions “that are paid by pensioners to 6% on average, and this will expand on auxiliary pensions.”
  3. “All auxiliary pension funds will be financed solely by their own resources,” that is to say, the implementation of the zero-deficit clause, which essentially will eliminate auxiliary pensions.
  4. “A first package of measures will be adopted immediately, aiming at 1% of the GDP from additional annual savings of 2016.” What does 1% of GDP mean? More than 1.8 billion euro in 2015 will be cut from pensions and the insurance system, in order to service the debt.
  5. Moreover, the proposal of the institutions provides for “having a close link between contributions and benefits”, that is, more reductions in pensions.
  6. “Finally, the institutions ask that “all parafiscal charges that finance pension funds are to be eliminated,” which implies a reduction of over 700 million euro per year in revenues for the funds.

2. The institutions, Mr. Juncker said, “insist in socially just measures.” What are those… social measures:

  • The abolition of subsidies for heating fuel.
  • The abolition of the Special Consumption Tax on diesel fuel of farmers.
  • The reduction of the 1500 euro amount and the abolition of the 25% threshold in seizures of bank accounts for debts towards the tax service.
  • The increase of the interest rate applicable in the debt restructuring program.

3. In terms of the VAT tax, the institutions insist on:

  • 23% in eating catering and hotels [they retreated in terms of the hotels at 13% after continuous pressures]
  • 13% only for the most basic foods, energy and water
  • Abolition of the reduced VAT tax in all islands

4. Never was an ultimatum given/ existed. Yet, the president of the Eurogroup Mr. Jeroen Dijsselbloem in his statements clearly stated that the deadline for Athens is expiring.

5. Lastly, it should be noted that this agreement in itself does not solve any problem. Each month there will be evaluation, while in five months everything is going to start all over again! There is no prospect, then, if this agreement happens, which “forgets” that there also exists a large debt to be adjusted. It will be a contract of permanent and “legal” captivity of the country.

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