Saturday September 26, 03:57 PM
Spanish govt seeks tax rises in austerity budget
MADRID (AFP) - Spain's socialist government on Saturday approved a draft austerity budget providing for tax rises worth nearly 11 billion euros (16.1 billion dollars), including increases in value-added tax and income tax.
"The sum of these measures will result in revenue of around 10.95 billion euros, or around one percent of our gross domestic product," Economy Minister Elena Salgado said after a cabinet meeting.
Under the new budget, the main rate of VAT will rise from 16 percent to 18 percent and the lower rate from seven percent to eight percent. The lowest rate of all will remain at four percent.
The government also intends to end a 400-euro income tax allowance and hike the tax on capital investment revenue, from 18 percent to 19 percent on the first 6,000 euros and 21 percent thereafter.
Prime Minister Jose Luis Rodriguez Zapatero is battling soaring unemployment and a mounting public account deficit which is expected to reach some 9.5 percent of GDP this year -- more than three times the official EU ceiling.
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