Spain plans tax hikes for the rich to slash deficit: PM

19th May 2010, Comments 0 comments

Spanish Prime Minister Jose Luis Rodriguez Zapatero said Wednesday he plans new tax hikes for the rich, one week after announcing tough new austerity measures to rein in the public deficit.

"I believe most citizens consider this effort (to reduce the deficit) must be hardest for those who have the most," he told a news conference.

A tax hike would not affect the "middle classes who already support a large part of the fiscal efforts in the country."

It "will be imposed at an opportune time for the government, in line with its plan of fiscal reduction and consolidation."

The prime minister gave no details of the planned tax hike.

Deputy Prime Minister Maria Teresa Fernandez de la Vega said on Friday that the government was considering taxes hikes to help slash the public deficit.

Zapatero last week announced cuts worth 15 billion euros (18.5 billion dollars) over two years in a new bid to shore up Spain's public finances after stocks plunged over fears it could follow Greece into a debt crisis.

The measures include a five-percent pay cut for public sector workers from June, a freeze on state pensions and a wage freeze from 2011.

Unions have called a public sector strike for June 8 and mass demonstrations to protest the plan.

The cuts come on top of a 50-billion-euro austerity package announced in January designed to slash the public deficit to the eurozone limit of three percent of gross domestic product by 2013 from 11.2 percent last year.

Spain entered recession in the second quarter of 2008 as the global financial meltdown compounded a crisis in the property market, which had been a major driver for growth in the preceding years.

Official data Wednesday showed the economy scraped out of recession in the first quarter, boosted by a rise in exports and household spending, but analysts warned any pick-up could be short lived.

© 2010 AFP

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