Spain Looks At New Tax Hikes
June 27, 2012 Taxation in Spain
MADRID – Spain is looking to eliminate some currently available tax breaks and raise tax rates on petrol and consumer goods in order to reduce the country’s spiraling budget deficit.
On June 26th the Treasury of Spain announced that the national government may soon need to raise taxes and implement a series of new austerity measures in order to reduce the country’s worsening financial situation. Explaining the country’s fiscal position, the Treasury released a statement, saying that over the month’s between January and May the government’s budget deficit reached a level of approximately 3.41 percent. The shortfall is already approaching the government’s deficit limit for the year of 3.5 percent.
The Treasury attributed the current level of the deficit to a series of monetary transfers made by the central government to the country’s regional governments. The payments are made regularly each year, but were brought forward in 2012 to aid the regional governments to boost economic activity around the country.
In an effort to raise more revenues and reign in the budget deficit, the Spanish government is now considering tweaking the VAT system and reclassifying several products to be charged at the full VAT rate of 18 percent, and not the reduced rates of 8 percent or 4 percent.
The government is also looking introducing a “green tax” on petroleum purchases, in line with recommendations which were previously issued to Spain by the European Union.
Investigations are also being conducted into the potential revenues increases which could arise from eliminating tax breaks which are available for individuals buying houses in Spain.
Photo by T_J_P