THE government has announced a round of tax cuts and job creation incentives over the next year.
It comes as Prime Minister Mariano Rajoy also insisted the economy would grow by 1% this year, up from the last forecast of 0.7%.
In his annual ‘state of the nation’ address he added that the country’s economy would grow by 1.5% in 2015.
He said his tough austerity measures of the last few years had helped move things along, and insists that Spain is now seen as ‘a motor’, rather than ‘a burden’, for Europe.
“The possibility of a rescue, of abandoning the euro, a lack of confidence, are words that no longer deserve a mention,” he said.
But he warned Spain could not become complacent, particularly as unemployment is likely to remain high.
To reduce the unemployment rate, Rajoy said social security contributions on new contracts would immediately be cut to a flat fee of 100 euros a month during the first two years.
The government will also exempt workers earning less than 12,000 euros per year from paying income tax from 2015, when Spain is scheduled to hold its next general election.
“Now is the time to encourage the creation of stable employment with a new and significant reduction in social charges,” Rajoy said.
Income taxes will also be reduced for middle and lower incomes and new deductions for families will be created as part of an overhaul of the tax system that will affect 12 million people, Rajoy said.
“Now that the sacrifices Spanish society has made are bearing fruit, the time has come to soften the demands that were forced upon us by necessity,” he said.
His claims certainly seemed to be true, with Brussels backing him up a few days later, raising their prediction for growth this year to 1% from 0.5%.
It believes Spain’s economy will grow by 1.7% in 2015.
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