Abstract
Spain’s Prime Minister Mariano Rajoy said on Tuesday the country would introduce a temporary measure to tax families with more than €1 million of assets as it tries to counter the effects of high inflation on households. Speaking in parliament, Rajoy said the measure would apply for six months, with the aim of ensuring that “those who have a lot of money can contribute to some degree to the country’s social needs”.
High inflation in Spain
Spain has been hit by a series of high-profile corruption scandals over allegations of undeclared bank accounts. The issue played a part in the decision of People’s Party lawmakers not to support a Rajoy-led cabinet.
The government has said it will introduce up to €50 million in backdated pay cuts and pension reductions for civil and military personnel, among others. It has also announced plans to cut corporate taxes.
EURACTIV.com
Citation from the parties about Spain’s inflation
The Socialist party, which opposes Rajoy’s conservative government, has attacked the measure as a “pathetic” attempt by Rajoy to raise funds for his political allies and said it would vote against it.
“This is not a wealth tax. This is a dog and pony show,” said Socialist party spokesman Antonio Hernando Tuesday. “The PP [People’s Party] is not going to gain votes with this, because voters do not believe it.”
The move comes as the government struggles to meet increased expenditure, after a cut in tax revenue from economic activity due to the financial crisis and higher social spending. The government estimates it will end 2012 with a deficit of 5.3 percent of gross domestic product, subject to revision later in the year. Earlier this month, Spain said it would miss its 2012 budget deficit target by 0.5 percentage points.
In 2012 the government said it would raise about €50 billion ($74.5 billion) through tax measures, with the latest announcement (following a similar announcement on Sunday) coming in addition to a €20 billion injection of capital from the European Central Bank.
The anti-corruption campaign has exacerbated Spain’s political crisis, leading to calls for early elections. The PP will vote against Rajoy’s cabinet on Wednesday and may also abstain on Thursday when Rajoy returns as finance minister. With a majority in parliament, the PP can govern without Socialist support but would be seen as weak if it relies solely on its own votes.
Summary to the point of Spain
Prime Minister Mariano Rajoy says families with more than €1 million of assets to be taxed. Spain has been hit by a series of high-profile corruption scandals over allegations of undeclared bank accounts. Socialist party will vote against Rajoy’s cabinet on Wednesday and Thursday.
