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Home > Property, Taxes > Spanish Government to Raise Taxes

Spanish Government to Raise Taxes

September 28th, 2009

Contrary to what would seem like reasonable Fiscal Policy in the midst of a deep recession, Spain’s Government has decided it will raise its Indirect tax, Value Added Tax or VAT.

It doesn’t take a degree in Economics to realise just how, errm to put it mildly, counterproductive this is to the broad Economy, more so in Spain’s case. With Consumer Confidence plummeting in Spain it would seem the Government should strive to incentivize spending, rather than curtailing it at every opportunity. Oddly enough and contrary to popular wisdom, that is exactly what it has announced last Saturday the 26th of September.-a tax raise leaving the door ajar to future tax raises…

With Spain’s Property Industry, which has long been Spain’s driving force along with Tourism, in the doldrums, with 5 million unemployed and reportedly steadily rising to unprecedented levels unseen since the days of the II Republic (1931), with a reported stock of between 1.6 to 3 million unsold houses (http://fistfulofeuros NULL.net/afoe/economics-country-briefings/three-million-unsold-properties-in-spain/) (both resales and new builds), with a Public Deficit spinning out of control adding 80 million Euros of debt everyday and with Consumer Spending spiralling downwards hitting fresh lows every month our Government decides that what is best needed by our countries’ ailing Economy is to …raise taxes; contradicting its much vaunted electoral promise of “lowering taxes”.

On Saturday the 26th of September it has been decided that as from next year 2010:

  1. The extended VAT of 16% is to be raised to 18%.
  2. The reduced VAT of 7% is to be raised to 8%. This is the tax that is levied on new builds (off-plans). The tax on resales remains unchanged. This is not welcome news by a struggling sector vying to unload a huge stock of unsold new build properties
  3. The super reduced VAT of 4% will remain unchanged.

One can only pray our Government will not raise even further our tax burden in such dire times. Lowering taxes is always the right path on the road to economic recovery which incentivates citizens saving and helps to attract Foreign Investments; both of which will be invested reactivating Consumer Spending which will ultimately lead to creation of new jobs, not to their destruction and the reckless public subsidizing of lost causes.

Property, Taxes ,

  1. raymundo
    November 19th, 2009 at 17:45 | #1

    The OECD has advised Spain today that it’s not the right time to raise taxes. They suggest differing any tax hike until 2011 when the Economy is hoped to be in a better shape to withstand it.

    http://www.eleconomista.es/economia/noticias/1708760/11/09/La-OCDE-recomienda-a-Zapatero-retrasar-la-subida-de-impuestos-a-2011.html (http://www NULL.eleconomista NULL.es/economia/noticias/1708760/11/09/La-OCDE-recomienda-a-Zapatero-retrasar-la-subida-de-impuestos-a-2011 NULL.html)

    Hopefully our Government will pay heed and realise it’s a mistake to raise taxes now.