Wednesday, 17 March 2010

Spanish VAT rise will up petrol, gas, electricity and more

A congressional attempt by opposition PP to scrap the proposal having failed, Spain is due to raise its Impuesto de Valor Añadido (IVA, or Value Added Tax/VAT) on July 1st. The 'general' tax is to go up by two points from 16 to 18% and the 'reduced' one from 7 to 8%. Petrol, gas, butane (bombonas) and electricity are set at the general rate, which means that they will all cost more. Petrol at the pumps will be up by an estimated 34 céntimos a litre, the bombona by at least 20 céntimos.>
The rise is not expected to be absorbed by any of these services, which in any case have their prices regulated by the government. Likewise, the rise will undoubtedly bounce all prices up by at least the 2%, but given prevous experience, there will be those who 'round off' upwards. The government deficit is expected to be reduced from 5.7 to 5.2% as a result.

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