Spain's New Government Already Betrays Taxpayers

Late last year, Spanish voters kicked out a socialist government and elected a new government led by the supposedly conservative People’s Party.

Is that translating into smaller government and more freedom? Doesn’t look that way. It seems that Spanish right-of-center politicians are just as useless and statist as the faux conservatives in Germany, France, and the United Kingdom.

The ballots haven’t even gotten cold and the new government is proposing a bevy of new taxes. Here are some of the grim details from Tax-news.com, including a class-warfare increase in the top tax rate.

…the incoming Spanish government, headed by Mariano Rajoy, is to introduce higher taxes from 2012 contrary to the party’s pre-election pledge. …The government has announced numerous tax hikes worth EUR6.2bn, for introduction in 2012, including income tax increases across the board, ranging from a 0.75% increase in the tax rate applicable on income of EUR9,500, to a 7% hike for those earning above EUR300,000. Savings income will also be subject to higher taxes under the proposals. Personal savings of up to EUR6,000 will be subject to a 2% rate; with additional rates of 4% on savings income up to EUR24,000 and 6% above this threshold.

By the way, all these tax hikes are in addition to an increase last year in the value-added tax, which was boosted from 16 percent to 18 percent.

Could it be, though, that tax increases are necessary because Spain has already cut spending? As you might imagine, that’s a joke.

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According to OECD data, government spending jumped from 39.2 percent of GDP in 2000 to 45.6 percent of GDP in 2010. Equally relevant, EU data shows that government spending almost doubled in the past 10 years.

In other words, Spain is screwed. The new government is just as bad – or perhaps even worse – than the previous government. I wrote two years ago that Spain was in trouble because of over-spending and I see no reason to change my analysis now. Actually, I have changed my analysis. Spain is going down the toilet even faster.