Jan. 9 (Bloomberg) -- Spain’s government will cut taxes to a level lower than they were when the People’s Party took power late last year before the next general election due in 2015, Budget Minister Cristobal Montoro said.
“We believe in stimulating our economy cutting taxes,” Montoro said in an interview on COPE radio station today. “At the end of this legislature all of us will be paying less tax.”
Prime Minister Mariano Rajoy raised taxes last month on incomes and property 10 days after taking power, even after pledging tax cuts during the election campaign. Spain’s 2011 budget deficit probably widened to 8 percent of gross domestic product compared with a 6 percent target, the government said on Dec. 30.
“We had a country teetering on the edge of the abyss,” Montoro said. “We had to act decisively.”
Montoro said he plans to impose caps on spending and borrowing by Spanish regional governments with penalties for those who don’t comply, similar to the European Union’s latest proposals for imposing budget discipline on members of the single currency area. He said the government has no plan to increase the sales-tax rate.
--Editors: Fergal O’Brien, Eddie Buckle
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