The Rajoy administration in Spain announced two months ago one of the largest tax increases in recent Spanish history. It aims to raise 6 billion euros ($7.9 billion) — along with a spending cut of nearly 9 billion euros ($11.8 billion). The measure mainly consists of a so-called solidarity surtax to come on top of tax rates on income and capital gains; it also includes an increase in real estate taxes.
The government announced the tax hike as “temporary” and “inevitable.” In fact, the measure demonstrates nothing more than a lack of political will to cut excessive and unsustainable public spending. You can learn more about Spanish fiscal and economic situation from Cato’s Institute Economic Development Bulletin, February 2012.
