BRUSSELS (MNI) – The European Commission on Wednesday said it
welcomed a new round of spending cuts and tax increases worth E65
billion announced by the government in Spain as an additional effort to
bring its budget deficit in line with EU rules.
On the tax side, the measures include a hike in the rate of VAT
from 18% to 21%, the termination of property tax breaks and an overhaul
of Spain’s controversial system of energy taxes and subsidies, which
though successful at making the country a major player in the renewable
energy sector, have caused a E24 billion gap between regulated power
prices and production costs.
Spending cuts include a salary cap for Spain’s mayors and a
cancellation of Christmas bonuses for public sector workers.
A spokesman for the Commission said the new measures, which came
just one day after EU finance ministers agreed to slow down the pace of
fiscal adjustment required of Spain, “are an important step to ensure
the fiscal targets for this year can be met.”
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