Spain hints at tax hikes to rein in deficit

14th May 2010, Comments 0 comments

Spain's government, under pressure on the markets and from its EU partners, said Friday it is considering taxes hikes to help slash the public deficit, in addition to other unpopular measure already announced.

"We are considering the situation, and we don't rule out anything," Deputy Prime Minister Maria Teresa Fernandez de la Vega said following a cabinet meeting in reply to a question about the possibility of a tax increase.

"The position is clear, people who have the greatest economic capacity are those who must bring the most to such a difficult situation that we are experiencing.

"Currently, the measures planned are those on the table, announced the other day" by Prime Minister Jose Luis Rodriguez Zapatero, she said.

Zapatero on Wednesday announced a new 15-billion-euro austerity package which includes a five-percent pay cut for civil servants.

But unions have condemned the measures and called for strike and street demonstrations.

The cuts are on top of a 50-billion-euro (63-billion-dollar) austerity package announced in January designed to slash public deficit to the eurozone limit of three percent of GDP by 2013 from 11.2 percent last year.

Spain has been named along with Portugal as a possible new weak link in the eurozone after debt-laden Greece.

© 2010 AFP

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