As part of the austerity package needed
to bring the Spanish economy and debt under control the government
has increased the rates of VAT charged on goods and services with
effect from the 1st September 2012.
Prior to this date Spain had three
rates of VAT, 4%, 8% and 18% with the various category of goods and
services subject to one of these rates.
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Graphic by Laverdad.es http://www.laverdad.es/RC/201208/31/Media/iva1.jpg |
From the 1st September the 8% rate has
been increased by 2 points to 10% and the 18% rate has been increased
by a greater amount to 21%. the lowest rate of 4% on essential goods
has not been increased although some items charged at this rate have
been reclassified to a higher rate group.
In the case of school supplies;
textbooks, albums, sheet music, maps and sketchbooks, remain taxed at
super reduced VAT of 4%; whilst pens, diaries, cards, craft pads,
compasses, colored paper and plasticine and similar items are now
classed as office supplies and are subject to a 17% increase in VAT
to 21%.
There has also been a recatagorisation
of items in the middle rate to the top rate, an increase from 8% to
21%. These include entry to theaters, cinemas, circuses and other
shows and some services, such as hairdressing and funeral services.
The same goes for some cosmetics and personal care products.
The increases in the rates are the
greatest rise in VAT rates in the history of Spain and are viewed
with suspicion by many sectors of the economy. The Consumers and
Users Organization has estimated the increase for consumers at 470
euros per year.
The Prime Minister of Spain, Mariano Rajoy, has acknowledged that
the VAT hike is a painfull measure and a sacrifice that all citizens
have to make because it will help the government to finance public
services. Having explained that his government has taken this action
because it is an essential step to tackle the current crises and
falling government revenues. He has been reported as saying "I
realize that is a sacrifice that comes at a very difficult time,"
and "nobody has the slightest doubt" that his government
would not have raised VAT if it had not been necessary. Rajoy has
emphasised that the tax increases are "exceptional instruments"
instigated to deal with an exceptional set of circumstances that
should never happen again and that VAT will return to the previous
situation when circumstances permit.
The Prime Minister gave his assurances that if Spain continues on
this path it will begin to regain confidence as a country, showing
that it is "serious and dutiful", enabling cheaper
financing and attract investment to return rapidly to grow and create
jobs.
It is very easy for him to offer this long term hypothesis as
justification for the increases in VAT but it is the unemployed, the
low income workers and the pensioners who will be those who suffer
the most in the present time. They will suffer because of the
failings of the monied elite.
How much closer will the state of the Spanish economy get to that of Greece?
How much longer will it be before the citizens of Spain escalate
their demonstrations against the policies of the rightwing Partido
Popular government led by Mariano Rajoy?
http://www.europapress.es/economia/noticia-hoy-entra-vigor-subida-iva-20120901081120.html
http://www.laverdad.es/alicante/rc/20120901/economia/vivir-desde-manana-caro-201208310051.html
http://www.europapress.es/nacional/noticia-rajoy-reconoce-subida-iva-dolorosa-no-caera-saco-roto-20120901141901.html
Update: 28.09.2012
VAT increase causes inflation to jump to 3.5 percent in September.
All I can say is that the present course, set by the PP (in power), will bring this country to its knees..God help us all!!!
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