Wednesday, June 27, 2012

Cost of living could rise steeply

The rate of IBA or VAT in Spain was 16% until 2010 when it was raised to 18%, the lowest in Europe.
Now the country is under pressure to raise the tax but the Prime Minister, Mariano Rajoy  is resisting the pressure because he says it will further damage consumer spending and inhibit growth.

Instead, the finance minister is considering plans to abolish the discounted tax rates on certain goods and services. At present, we pay 8pc on the majority of food and sanitary products, ground transport, cultural activities such as cinema and theatre tickets, and hotel stays. We pay a super reduced rate of 4pc on basic foodstuffs such as milk, bread, fruit and vegetables and on books and newspapers

Raising the VAT to 18pc on all products and services would bring a significant increase to our weekly shopping bills. Let’s face it, the impact of an extra 12% on basic items of food would be catastrophic for many who are already struggling to make ends meet.

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