Spain approves wealth tax to battle deficit

16th September 2011, Comments 0 comments

Spain's government approved Friday the re-imposition of a wealth tax in 2011 and 2012 to battle the bloated public deficit.

The wealth tax, suspended in 2008, was approved at a weekly cabinet meeting, the government's senior spokesman, Jose Blanco, told a news conference.

The tax will only affect about 160,000 people, Blanco said. "Everyone else won't pay," he stressed, saying this meant 94 percent of the population would not pay the new tax.

Spanish Finance Minister Elena Salgado said the previous day that the wealth tax would boost state revenues by about 1.08 billion euros ($1.5 billion).

People's homes would be exempt from the wealth tax up to a value of 300,000 euros and their other assets exempt up to 700,000 euros, Salgado said.

Spain has promised to reduce its annual public deficit from the equivalent of 9.2 percent of gross domestic product last year to 6.0 percent of GDP this year, 4.0 percent in 2012 and 3.0 percent in 2013.

Doubts linger over its ability to reach those goals because of the slow pace of economic growth, an unemployment rate of more than 20 percent and stubborn deficits in the semi-autonomous Spanish regions.

© 2011 AFP

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