Spain, one of the European nations hardest hit by the Wall Street-created Great Recession, must apply more austeirty, declared the International Monetary Fund, one of the three pillars of the troika overseeing loans to the most-afflicted European nations.
Austerity, of course, means yet more draconian measures inflicted on those least able to afford them, and n the case of Spain,, mandated measures include yet more cuts to education and continuation of hikes in valued-added [sales] taxes, that most regressive of all measures of mining the populace for wealth.
From El País:
The International Monetary Fund (IMF) has called on Spain to raise reduced rates of value-added tax (VAT), special taxes and environmental levies, including those on fuel. What’s more, it is calling on the government to look into the efficiency of spending on education and health. The aim of all of these changes is to bring down the deficit and public debt, the size of which, says the global organization, is leaving the Spanish economy “highly vulnerable to external disturbances.”
“We are not suggesting austerity,” said Andrea Shaechter, the IMF economist in charge of monitoring the progress of the Spanish economy, at a press conference at the Bank of Spain on Tuesday. “The adjustment can be gradual and be carried out via tax hikes,” he added, using the example of sales tax. “Compared to the rest of Europe, there is a large margin in terms of the reduced rates of Value Added Tax [in Spain], such as the rate collected by restaurants.”
In its analysis of the Spanish economy, the institution headed up by Christine Lagarde says that the country’s public deficit could end up coming in above original forecasts. “Immediate attention should be focused on restarting a gradual fiscal consolidation with the aim of setting the high volume of public debt on a steady descending course,” the IMF concludes.
The way to do this, according to the IMF, is through tax rises. “Spain can allow itself a rise in revenues,” the report argues. “By gradually reducing the number of VAT exemptions, the amount it collects would approach those of other EU countries. What’s more, and especially in these times of low energy prices, there is room to raise special taxes and environmental rates, as well as dealing with the inefficiencies and differentiated treatment of the tax system,” it argues. The IMF believes that this would see the tax burden pass from work to consumption, which would help growth.