Large increase in VAT is expected
SPAIN (Agencies) Mariano Rajoy, President of the Government, is about to present the country with a new round of cutbacks and tax measures, according to the Spanish media. The objective is to meet the demands from Brussels about lowering the national deficit, the result of the EuroGroup meeting held earlier this week, which did relax these demandsomewhat. It is widely believed that the measures will be 'brutal', as one online paper put it. However, some say it will not be as high as the €30 billion - about 3% of GDP - that others expect, aimed at pacifying Brussels for the latest bank rescue pckage. The same sources think that IVA (VAT) will go up significantly, some say up to 23% from the present 18%. One of the many reasons behind the new round of cost cutting (mainly but not exclusively in education, it is thought) is that the country's deficit last year was 8.9% of GDP instead of the 6% once predicted. Some other expected cutbacks: Reducing cost of public servants by asking them to cut out one annual 'extra' salary; freeze pensions; reducing unemployment benefits; closing down public television stations, more likely the regional ones. The internal debate in its various factions has become well known but the Government is saying officially that nothing has been defined and these are 'merely technical calculations'. We shall see.