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Spain Set To Raise Taxes To Please Eu And IMF

Wed 27th Jun 2012
Spain Set To Raise Taxes To Please Eu And IMF

Hard hit Spaniards are likely to be hit in the pocket once again as the Spanish Government are considering a raft of taxes rises as it struggles to reduce it's defecit and apease the EU and IMF.

Investors in Spanish Government Bonds are understandably cautious and demanding higher risk premiums making the cost of borrowing for Spain the highest it has ever been.

Sensitive to the situation, the treasury are keen to raise any capital it can and keep borowing down through taxation.

Amongst the tax measures being considered are rises in energy and property tax, all of which if raised will virtually collapse the economy in a dramatic meltdown.

Property vendors struggling to sell their properties will be forced to discount their properties further and increasing already high energy prices will lead to drastic cuts in demand from consumers.

An IMF report recently suggested that Spain should raise it's taxes, especially IVA (A.K.A - VAT), to combat the double-dip recession, a tough measure which the EU agrees with. Spanish PM, Mariano Rajoy as so far resisted presure from the EU and IMF to raise VAT, amongst the lowest in the EU at 18%. However, his government are looking into increasing VAT applied to some goods and services which have discounted VAT rates, often as low as 4%.

The Government are also considering introducing a so-called "green tax" on petrol, following recommendations by the European Union, Treasury Secretary Marta Fernandez Curras said.

However, economist are predicting meltdown if these measure are introduced at a time when tax reciepts are falling, unemployment is high and still climbing and consumer spending activity is falling sharply.

Comment on this Story

To be fair to them, the Gov't DID wait 6 months before breaking their number 1 election promise of NOT increasing taxes... (Not that anybody actually expected them to keep it!)
Mr Grumpy - Wed, 27th Jun 2012

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