Socialists under attack over planned EUR 400 rebate

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Opposition Popular Party calls measure "last-minute idea"

29 January 2008

MADRID - Spain's governing Socialist Party on Monday defended a plan to offer workers and pensioners an unexpected EUR 400 income tax rebate if re-elected in the general election on 9 March, arguing that the initiative will go a long way to helping cash-strapped Spaniards as the economy slows.

"This measure will have a direct impact on families [...] and it is progressive because it helps those families earning the least more than others," Deputy Prime Minister María Teresa Fernández de la Vega told reporters yesterday.

Labour Minister Jesús Caldera, who is coordinating the Socialist Party's election campaign, likened the rebate to not having to pay a mortgage for a month. "The amount is very similar to the average monthly mortgage payment, which is EUR 480," Caldera said.

The Socialists have promised to phase in the changes to income tax legislation during the second half of this year if they are re-elected. However, many critics say that may be too little too late after the government was forced to cut its expectations for 2008 economic growth amid a looming global slowdown.

Opposition parties, meanwhile, have accused the government of trying to "buy votes" ahead of the election.

"It is evidently a last-minute idea [...] by a government that has ignored the economy all legislature," Popular Party Secretary General Ángel Acebes said. "They're basically saying we overcharged you, so here is EUR 400 back so long as you vote for us."

The PP, which also previously promised tax cuts if elected, argued that a one-off measure will fail to have much impact. "The tax system should be transparent," Acebes argued. However, at a cost of EUR 5 billion, a quarter of the budget surplus last year, the government claims that the state coffers can easily afford it.

"We can do this without taking a single euro away from planned investments in social welfare, infrastructure, education, and so on," De la Vega said yesterday.

[Copyright EL PAÍS / Lucía Abellán / Luís Rodríguez Aizpeolea 2008]

Subject: Spanish news

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