Greek deal with Eurogroup: A mixed bag of reforms

Eurogroup finance ministers approved Greece's reform package on Tuesday, marking the start of discussions as to how to cover the country's funding gap in two stages (a) the end of April, and (b) the end of July. Sources state that it is still unknown as to how Greece will be able to cover its funding needs.

The agreement could affect the government's intent to abolish the single property tax (ENFIA), regulate the settlement of overdue debt in 100 installments and create a tax-free salary threshold at 12,000 euros.

The "bridge" deal achieved by the Greek government managed to cancel measures that were included in the controversial e-mail to Greece's international creditors by former conservative finance minister Gikas Hardouvelis that included an increase to hotel VAT tax, pension reductions and public sector dismissals. In exchange, the government has pledged not to proceed in measures promised during its pre-election campaign.

The bridging deal:

Taxation

1. VAT policy amendment with the elimination of 'unreasonable' discounts. Sources also spoke about a possible VAT increase in the Aegean islands though these leaks were later denied.
2. Remove exceptions and exemptions provided by the income tax code and replace these with fairer measures of a social nature.
3. Taxation of collective investment and expenditure from income tax.
4. Tougher legislation on tax fraud and evasion.
5. Control of transfer pricing.
6. Cooperation with European and international authorities to identify properties of undeclared income.

Public Finances

1. Greater budget transparency.
2. Speeding up of arrears from the state to the private sector with tax refunds and pension claims.
3. Enhancing the fiscal...