The Spanish government has made public new tax increases as an attempt to meet the estrict terms of its deficit-reduction program. According to the meassures taken the VAT will increase from today´s 18% to a 21%.

Last week, the European Commission had urged the administration of Prime Minister Mariano Rajoy to increase VAT.

The coming increases affect the VAT, In addition to this, the package will include a pension system reforms, a salary decrease for civil servants, new motorway tolls and additional drastic reductions in ministry and regional spending.
In addition to this, the government is also considering another recommendation made by Brussels that involves raising environmental taxes.  Currently they amount to only 1.62 percent of the annual GDP, compared with a European average of 2.6 percent.
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