SPAIN is making a concerted effort to lower its national deficit, and many of people’s favourite vices will be caught in the crossfire.
Finance Minister Cristobal Montoro has indicated that levies will be increased on alcohol and tobacco products, and a new sugar tax will be introduced on fizzy drinks.
The move comes following increased pressure from the EU for Spain to bring its deficit down to below 3 per cent. Numerous attempts to do this have been made in recent years, but thus far all have failed, largely due to ongoing issues with unemployment.
Although unemployment in Spain remains high, the situation has improved significantly since 2013, when it clocked in at almost 27 per cent. Now, in a bid to appease Brussels and sort out the deficit once and for all, the new conservative government has outlined several tactics. In addition to the new taxes, Montoro has indicated that companies will be privy to fewer rebates, a move which is expected to bring in €4.3 billion. However, this may be offset by the plan to raise minimum wage to €825.50 a month, a decision which the new government arrived at following years of clamouring from the Socialist (PSOE) party.
Montoro has stated that the government is aiming to bring the national deficit down to 2.2 per cent by 2018. He acknowledged that this will not be an easy task. Reducing the country’s current GDP deficit from 5.1 to 3.1 per cent – the government’s goal for next year – would require an adjustment of €16 billion.