AS revenues fall due to the economic slump the Spanish government has decided to raise taxes. Alcohol, tobacco and some fuel will get more expensive as the government tries to rake in more money to fill the national coffers.
Treasury Minister Cristobal Montoro said he hopes the tax rises will bring in an extra €1 billion with billions more expected from changes to corporation tax breaks.
He expects €700 million to come from the increase in alcohol and tobacco duties. Taxes on alcohol will rise by 10 per cent, but that will be restricted to spirits. Beer and wine will not be affected.
A further €3.65 billion is to be squeezed from Spain’s hard pushed businesses with a change in rules on tax breaks on losses from companies’ foreign investments.
Montoro said the government would limit corporate tax deductions on losses in foreign operations or investment portfolios.
And a tax on fluorated gases, which are used in air conditioning systems and fridges, should bring in another €700 million a year.
The government also announced further cuts in spending as part of its ongoing struggle to bring public debt under control. Tax revenues have been hard hit as the economic turmoil of the last five years has left the country in and out of recession.
Meanwhile the International Monetary Fund (IMF) has said that Europe needs to do more to help Spain through the economic crisis.
Without more help the country’s ‘hard won’ banking solvency could be put in danger.
In a statement after a recent visit to Spain the IMF said that although decisive action had been taken to stabilise the country’s banks, more was needed to avoid what it called the ‘financial fragmentation’ the country is facing.