Spain Announces Economy-Boosting Reform Package

by Ulrika Lomas, Tax-News.com, Brussels

18 August 2008

In the face of rampant inflation and global economic uncertainty, Spanish Prime Minister Jose Luis Rodriguez Zapatero on Thursday announced a reform package designed to boost growth and help Spanish taxpayers to weather the ongoing economic storm.

Calling his ministers back early from their summer breaks, Zapatero reiterated the government's intention to eliminate the wealth tax. He also pledged to streamline the process for VAT reimbursements to companies, although he revealed that the proposed tax measures still required parliamentary approval.

In addition to the tax adjustments, which according to reports would inject an additional EUR10bn into the Spanish economy, the Prime Minister revealed plans to further open up the services sector (under the auspices of an EU directive in this area), and to reduce bureaucracy for SMEs. Proposals to help Spanish residents obtain mortgages were also part of the 24 measure reform package, according to reports.

Recent estimates have predicted growth of 1.6% in 2008, and 1.0% in 2009, as the property boom in Spain draws to a close.

The Spanish government hopes that the recently announced reforms, coupled with a stimulus package announced in April of this year, will be enough to enable the country to avoid recession, and to return to 3% economic growth by 2010.

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