Spain Eyes Temporary Tax Hikes

by Ulrika Lomas, Tax-News.com, Brussels

03 September 2009

Spanish Prime Minister Jose Luis Rodriguez Zapatero has confirmed that his Socialist government’s 2010 budget, due next month, is not likely to contain personal or corporate income tax increases.

He announced recently that the government would instead implement 'moderate' measures to boost ailing tax receipts, with a hike to the 18% capital gains tax rate looking increasingly likely.

Addressing a press conference in Copenhagen, broadcast throughout Spain, Zapatero adopted a diplomatic tone, seeking to quash concerns that any increased burden in the budget would fall on higher income earners. The Socialist government recently back-pedalled on its proposal to tax higher incomes after facing strong criticism in the Spanish media. Zapatero, distancing himself from any such move, underscored that taxes on personal income and corporate income would remain untouched.

Zapatero was quoted by the national and international media as revealing that the government's austerity measures would comprise of “some adjustments, some revisions, some increases and some decreases,” adding that “in all cases the changes will be limited and temporary,” and that “any rise in tax would be reversed as soon as economic conditions permit”.

Alongside a near-certain hike in capital gains tax, the government is thought to be considering the removal of an EUR400 tax deduction, introduced in 2007.

Recommended