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Spain to cut taxes for small businesses

Source: EFE - Thu 2th Dec 2010

Spanish Prime Minister Jose Luis Rodriguez Zapatero announced Wednesday a new set of measures to boost the economy while also curbing public spending, such as a tax cut for small business and scrapping special payments to people whose unemployment benefits have run out.

The cabinet is set to approve the package Friday, he told parliament.

Under the government's plan, and additional 40,000 small and medium-sized firms will qualify for the lowest corporate tax rate, the premier said.

He also said the special payments of 426 euros ($559) a month going to unemployed workers who have exhausted their jobless benefits will end in February.

Spain's unemployment rate is around 20 percent, the highest in the 27-member European Union, and Zapatero pledged to double - from 1,500 to 3,000 - the number of centers to help unemployed workers with job searches and retraining.

The government also plans to sell 30 percent of the company that runs the lotteries.

Zapatero's administration rolled out the economic package in an attempt to reassure financial markets, which have pummeled Spain since debt-strapped Ireland was forced to accept a bailout by the EU and the International Monetary Fund.

The prime minister and other officials have been saying for months that Spain will not need a bailout, but their tone has become more emphatic since the EU and IMF came to the rescue of Ireland's struggling banks.

Spanish officials stress that Madrid's ratio of debt to gross domestic product is below the EU average and vow to follow through with austerity measures aimed at reducing the budget deficit to 3 percent of GDP by 2013 from current levels of more than 10 percent.

After a period of low growth following the global recession, Spain's GDP stood still in the third quarter.

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