Courtesy of Mish.
The last thing a country in recession should do is raise taxes. Well, Spain is in a depression, not a recession yet the EU requires Spain to raise the VAT and lower pension benefits within a year.
One year. That is the time that the government has to undertake major reforms. The European Commission has published today the document with recommendations to the European Council on the National Reform Plan. Includes advice on pensions, taxes, government spending, administrative reform, etc.. There is virtually nothing that Brussels (and the governments of EU members) does not create the need to change, accelerate or deepen.
On Wednesday Brussels gave Spain more time to reach a budget deficit of 3%, but warns that to achieve this, it is still necessary to continue with the fiscal effort.
Brussels calls for “a systematic review of the tax system by March 2014.” Normally, these words have meant raising taxes on consumption (VAT or special) to relax the pressure on other that penalize wealth creation, such as income tax or social contributions. But in the current document there are only requests to raise taxes.
The above snip did not do full justice to the idiocy of the latest Brussels demands. The only thing I support is pension reform.
Tax hikes will do nothing but cause another plunge in revenues and another rise in unemployment.
Mike “Mish” Shedlock