Spain Announces Tax Hikes to Combat Economic Slump
Spain announced tax hikes on alcohol, tobacco and some fuel, and limitations on corporate tax deductions on Friday, as part of the government's battle to raise public revenue hit by an economic slump.
The tax measures are worth increased revenue of 1 billion euros ($1.30 billion) this year, Treasury Minister Cristobal Montoro said at the government's weekly news conference.
The measures include a 10 percent rise on the existing alcohol tax, which does not affect wine or beer. The higher alcohol tax and a rise in the tax on tobacco will mean increased revenue of 700 million euros a year, the minister said.
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Montoro said the government would limit corporate tax deductions on losses in foreign operations or investment portfolios. The change to the tax rules on losses in companies' investment portfolios would mean 3.65 billion euros in revenue per year, he said.
A higher tax on fluorinated gases, used in refrigeration and air conditioning, would mean 700 million euros in additional revenue per year, he said.
Spain's tax revenue has been battered by a five-year off-and-on recession after a decade-long property bubble burst left the country with one of the highest public deficits in the euro zone.
The previous and current governments have focused mostly on spending cuts to balance the books.
The government also slightly raised its GDP growth forecasts for 2015 and 2016 and cut ministry spending for next year.