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Tax amnesty far from government target

Source: Reuters - Mon 3rd Dec 2012
Tax amnesty far from government target

A Spanish tax amnesty aimed at boosting revenues from a recession-bound economy raised less than half its €2.5 billion target for 2012, the Treasury Ministry said on Monday.

The amnesty, criticised for pardoning tax evaders with a reduced rate while the government increased income and service taxes on most taxpayers, brought in just €1.2 billion.

Spain has been struggling to avoid being sucked into the euro sovereign debt crisis and is widely expected to seek an international bailout eventually.

Its tax amnesty offered a reduced tax rate of 10% on up to 5 years of previously undeclared earnings for individuals who made their hidden income official.

Spanish tax revenue has fallen sharply over the last 4 years as companies struggle to survive and a 25% unemployment rate deters consumers from spending.

The amnesty formed part of a programme of tax hikes and spending cuts worth over €60 billion, or more than 6% of GDP, to the end of 2014.