BLOOMBERG, EL PAIS, EL MUNDO (Spain)
MADRID - Reversing an earlier no-new-taxes pledge, Spanish Prime Minister Mariano Rajoy has announced tax increases and spending cuts totaling 65 billion euros ($80bn) over the next two-and-a-half years to try stave off the accumulating debt crisis, Bloomberg reports.
Rajoy's fourth austerity package in seven months includes a 3% VAT hike – which directly contradicts Rajoy previous promise that he would not raise taxes and has some worried that it could send Spain into a deep recession. But the move comes one day after European officials agreed to a 30 billion-euro bank bailout for Spain, the first instalment of a package worth up to 100 billion euros agreed in June.
"I said I would cut taxes and I'm raising them …But the circumstances have changed and I have to adapt to them," the Spanish Prime Minister told Parliament.
The Spanish daily El Pais also reports that the government will reduce the number of city councilors by 30% and block the salaries of mayors.
Meanwhile, El Mundo noted that unemployment benefits will be cut after a six-month unemployment period, adding that employees from the public sector could also bid farewell to their Christmas bonus this year. The Madrid-based daily published an interview with the leader of the Spanish opposition, Alfredo Pérez Rubalcaba, who stated that "Today, Spain is doing worse."
The series of measures come as thousands of Spanish miners from all over the country arrived in Madrid after 20 days of marcha negra, to protest against government cuts to subsidies. The miners, wearing their helmets with the lights turned on, are protesting against a 63% cut in subsidies to coal-mining companies. In northern Spain, demonstrations outside coal mines have already resulted in clashes with police.