key2thecup Posted July 12, 2012 Share Posted July 12, 2012 Spain Deepens Austerity Under European Pressure Prime Minister Mariano Rajoy announced a swathe of new taxes and spending cuts on Wednesday designed to slash 65 billion euros from the budget deficit by 2014 as recession-plagued Spain struggles to meet tough targets agreed with Europe. Rajoy, of the center-right People's Party, proposed a 3-point hike in the main rate of Value Added Tax on goods and services to 21 percent, and outlined cuts in unemployment benefit and civil service pay and perks in a parliamentary speech interrupted by jeers and boos from the opposition. "These measures are not pleasant, but they are necessary. Our public spending exceeds our income by tens of billions of euros," Rajoy told parliament. He also announced new indirect taxes on energy, plans to privatize ports, airports and rail assets, and a reversal of property tax breaks that his party had restored last December. However, he did not touch pensions — keeping one election promise — and said the tax burden was being shifted from direct taxes on labor and income to taxation on consumption. Outside in the streets of Madrid, hundreds of coal miners who had staged a march from northern Spain protested against cuts in mining subsidies they say will put them out of work, as public discontent over austerity measures grows. With five years of economic stagnation and recession, unemployment at 24.4 percent and tax revenue falling, Spain is struggling to meet tough deficit cutting targets agreed with the European Union. The high deficit and weak banks, which will receive up to 100 billion euros in European aid, are now at the center of the euro zone's debt crisis as investors fret that Spain could join Greece, Portugal and Ireland in needing a sovereign bailout. Madrid's borrowing costs have soared in recent months, with the yield on the 10-year government bond breaching the 7 percent level regarded as unsustainable in the long run. On Wednesday, that yield fell to 6.81 percent. The EU agreed on Tuesday to give Spain more time, until 2014 instead of 2013, to bring the public deficit down to 3 percent of gross domestic product and relaxed this year's goal to 6.3 percent. However, a European Commission document said even that easier target would be difficult to reach. With the latest measures, Rajoy completely overhauled his previous budget plan, in which the central government and 17 autonomous regions had put in place some 48 billion euros in savings for 2012, insufficient to bring the deficit into line. It was not immediately clear exactly how much of the 65 billion euros headline figure was new savings. Rajoy announced reforms to city hall governments, shutdowns of public companies, reduced benefits for civil servants, budget cuts for political parties and labor unions. The prime minister, who had pledged in his election campaign last year not to raise VAT, said he now had no choice. The main rate will rise to 21 from 18 percent and the reduced rate to 10 from 8 percent in a move that could further depress consumer spending. "We are living in a crucial moment that will determine the future of our families, our youth, our social welfare and all our hopes," he said. "That is the reality. We have to get out of this mess and we have to do it as soon as possible." Miners Protest As Rajoy announced the new austerity measures, hundreds of coal miners marched through the center of Madrid to protest against a previous 60 percent cut in coal subsidies that they say will shut down mines and put them out of work. The miners, who had walked some 400 km (250 miles) from the Asturias region over 44 days, were joined by thousands of supporters, including labor activists, on Wednesday after receiving a hero's welcome in the capital on Tuesday night as they marched in with lamps lit on their helmets. Public anger over spending cuts has risen as school and hospital budgets have been hit. "Without the mines we don't have anything, absolutely nothing in our region," said one of the miners in the protest, Albano Gonsalvez. With nearly one quarter of the workforce and more than half of young Spaniards without a job, the government said unemployment benefit would fall to 50 percent of previous earnings from 60 percent after the first six months on the dole. Rajoy said the measure was intended to increase the incentive to look for work. http://www.cnbc.com/id/48144383 Link to comment Share on other sites More sharing options...
Armada Posted July 12, 2012 Share Posted July 12, 2012 The EU's not gonna last for very long. Link to comment Share on other sites More sharing options...
ronthecivil Posted July 12, 2012 Share Posted July 12, 2012 We should do the same here. Up GST by one point and keep up the program of cuts to the federal budget. Get the painful choices out of the way before they bite us even harder in the future. There's no reason to be aiming for eliminating the federal deficit in three years when we could be in surplus next year. Link to comment Share on other sites More sharing options...
ronthecivil Posted July 12, 2012 Share Posted July 12, 2012 The EU's not gonna last for very long. Link to comment Share on other sites More sharing options...
Armada Posted July 12, 2012 Share Posted July 12, 2012 If energy prices tank (not an unreasonable situation what with world economies tanking) and our housing market drops (also very possible) then our own indebted population (at the federal, provincial, and personal level) which is at record level of debt to income levels could see a large drop in revenues resulting in a very VERY similar situation here. Canadians have no reason to be smug! Link to comment Share on other sites More sharing options...
Mr. Ambien Posted July 12, 2012 Share Posted July 12, 2012 If energy prices tank (not an unreasonable situation what with world economies tanking) and our housing market drops (also very possible) then our own indebted population (at the federal, provincial, and personal level) which is at record level of debt to income levels could see a large drop in revenues resulting in a very VERY similar situation here. Canadians have no reason to be smug! Link to comment Share on other sites More sharing options...
Columbo Posted July 12, 2012 Share Posted July 12, 2012 We should do the same here. Up GST by one point and keep up the program of cuts to the federal budget. Get the painful choices out of the way before they bite us even harder in the future. There's no reason to be aiming for eliminating the federal deficit in three years when we could be in surplus next year. Link to comment Share on other sites More sharing options...
ronthecivil Posted July 12, 2012 Share Posted July 12, 2012 I'm not trying to be smug. It just seems inevitable. I would say a majority of the countries in the EU are struggling, some notably a lot more than others. Link to comment Share on other sites More sharing options...
ronthecivil Posted July 12, 2012 Share Posted July 12, 2012 Raise taxes a bit, sure, I could be in favour of that. But above 20% like in Spain (and much of Europe) is just too much. It hurts the middle class too much, they have less expendable money, and as consumer spending falls, jobs and the economy go with it. Link to comment Share on other sites More sharing options...
Drybone Posted July 12, 2012 Share Posted July 12, 2012 I have no idea why Spain is doing this when all it does is prolong the agony. I guess they are waiting to see what happens in the election . Link to comment Share on other sites More sharing options...
ronthecivil Posted July 12, 2012 Share Posted July 12, 2012 I have no idea why Spain is doing this when all it does is prolong the agony. I guess they are waiting to see what happens in the election . Link to comment Share on other sites More sharing options...
key2thecup Posted July 12, 2012 Author Share Posted July 12, 2012 I have no idea why Spain is doing this when all it does is prolong the agony. Link to comment Share on other sites More sharing options...
Drybone Posted July 13, 2012 Share Posted July 13, 2012 'Cause the EU said so. Link to comment Share on other sites More sharing options...
key2thecup Posted July 13, 2012 Author Share Posted July 13, 2012 lol. And how long does that last until the economy suffers due to the tax increase. Its a swirling toilet bowl. I give it 6 to 12 months. Link to comment Share on other sites More sharing options...
Kamero89 Posted July 13, 2012 Share Posted July 13, 2012 ugh, are you just going to tax people to the point where they can't afford anything? In desperate economic times you can't go after the middle and lower classes, there is just not enough money there to tax to fix your problem. Link to comment Share on other sites More sharing options...
DIBdaQUIB Posted July 13, 2012 Share Posted July 13, 2012 ugh, are you just going to tax people to the point where they can't afford anything? In desperate economic times you can't go after the middle and lower classes, there is just not enough money there to tax to fix your problem. Link to comment Share on other sites More sharing options...
DefCon1 Posted July 13, 2012 Share Posted July 13, 2012 We should do the same here. Up GST by one point and keep up the program of cuts to the federal budget. Get the painful choices out of the way before they bite us even harder in the future. There's no reason to be aiming for eliminating the federal deficit in three years when we could be in surplus next year. Link to comment Share on other sites More sharing options...
ronthecivil Posted July 13, 2012 Share Posted July 13, 2012 Raise taxes for what?? So Stephen Harper could spend more of it on military or buy new shoes?? As long as that idiot is in the office, we will be suffering and it wouldn't even matter if the taxes was raised. He is following the same footprint as our brothers in the south and Canada will be doomed. The best thing would be to get that idiot out of here and elect someone else who doesn't waste our tax money. You can't just keep taxing people while at the same time cutting services when the priority is all screwed up. Link to comment Share on other sites More sharing options...
ronthecivil Posted July 13, 2012 Share Posted July 13, 2012 ugh, are you just going to tax people to the point where they can't afford anything? In desperate economic times you can't go after the middle and lower classes, there is just not enough money there to tax to fix your problem. Link to comment Share on other sites More sharing options...
Spoosh Posted July 13, 2012 Share Posted July 13, 2012 The way this is going, all Euro -countries and pretty much all the others as well will find themselves in a similar situation. The Euro -countries will keep pushing that method and lending the weaker money and forgiving national debts and in exchange of course the countries themselves have to make hard descisions like that and raise taxes and so on like mentioned in the OP. All this will continue until all countries are pretty much in the same situation. The big ones, France, Germany nor the smaller like Finland can't keep supporting for long as they face the same problems, just at a slower pace. Dunno about Canada, but it can't be all bed of roses there either as this and what has been done for so long in the US affects everyone else too. Link to comment Share on other sites More sharing options...
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