By James Bryce
THE Spanish government has announced cuts totalling 27 billion euros in what is one of Europe’s fiercest ever budgets.
A pay freeze for civil servants and departmental budget cuts of 17 per cent are among a raft of measures announced by budget minister Cristobal Montoro on Friday.
Spaniards will experience a seven per cent rise in electricity bills from April 1, and while VAT will not be raised, big business will be hit with increased corporation taxes.
Many of the measures announced are aimed at closing loopholes exploited by corporate business, meaning many pay tax of just 8.5 per cent.
They also include a 10 per cent ‘no-questions-asked’ tax on money that emerges from the black economy, which the government hopes will save six billion euros a year.
There are no income tax rises because these were announced in December, accounting for another six billion euros of the savings.
Deputy Prime Minister Soraya Saenz de Santamaria acknowledged that the nation was in an ‘extreme situation’.
“Our top priority is to clean up public accounts,” she said.
The budget was approved at a cabinet meeting on Friday and is aimed at helping Spain meet a deficit target of 5.3 per cent this year.