Spain Considers 2010 Tax Changes
June 23rd, 2009
Spain will decide whether to hike income tax for high earners and reduce tax breaks in 2010 after the summer, Economy Minister Elena Salgado said in an interview on Sunday.
‘In September we will have better information and that will be the moment to take decisions,’ Salgado said in an interview with newspaper El Pais.
It is too early to say if Spain’s weak domestic demand has reacted to stimulus measures including an annual income tax break of 400 euros ($556.8) or whether it could stand an increase in value added tax, the minister said.
‘The area of most weakness is domestic demand … one has to be prudent when asked to cut social security contributions and hike VAT.’
Spain is spending billions of euros on state construction projects to fill some of the shortfall in private demand, and is set to run a budget deficit equivalent to around 9.5 percent of GDP in 2009, despite nudging up fuel and tobacco taxes.
The minister said she will also study taxes hikes for company executives as parliament has asked her to, but the contribution to the public coffers from such a measure would be small since Spain’s tax system is already very progressive.
Spain’s parliament will vote on spending levels this week ahead of the draft 2010 budget.
Salgado, who took over from previous economy minister Pedro Solbes in April, has promised to bring Spain’s budget deficit below the 3 percent European Union threshold by 2012.
Story from Forbes.com
