Wednesday, July 11, 2012

OMG, Spanish Suicide

Spanish Prime Minister Mariano Rajoy is proposing a swathe of new taxes.

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.

He also called a new indirect taxes on energy and a reversal of property tax breaks that his party had restored last December.

On the plus side, he did call for some cuts in government spending. However, the new taxes will only result in more suffocation of an economy that is already on a death spiral.

"These measures are not pleasant, but they are necessary. Our public spending exceeds our income by tens of billions of euros," Rajoy told parliament.

In the short-term, only the banksters win, as the sovereign debt they hold will continue to be paid off. Long-term the higher taxes will cause even more of the creative and productive to leave the country.

Spain has already seen five years of economic stagnation and recession, unemployment at 24.4 percent and tax revenue falling. Higher taxes will only suck more out of the shrinking productive sector of the economy, the private sector. Spain is headed toward third world country status.


  1. But Rob, you're missing the point, they get to stay in the club for a while longer, in the same room as the great and the good, enjoying the fancy buffet and bar, making nonsensical sound bites about how recovery is just round the corner on the box.