Spanish Tax Increases Propsed

Spain’s socialist government intends to raise an additional €11bn a year according to recently published tax increases that would also help to reduce the budget in the wake of the economic crisis. However, opponents were not convinced the measure would really be of any help.

Just 6 Months ago many of the Country’s ministers stated that how Spain did not need to increase taxes, but on Saturday, the cabinet finally approved an ‘austerity’ budget for 2010 that intends to cut spending and increase taxes.

The new plan also throws out a €400 annual tax rebate that was enacted two years ago, before the housing boom came to a crashing halt. Public spending allotments will also be reduced by 3.9% in an attempt to curb costs.

In July of 2010, the VAT rate will increase to 18% and the VAT for businesses and hotels will rise to 8%. Economy Minister Elena Salgado said that the new tax measures will help to increase the gross domestic product of Spain by about 1%.