MADRID (Reuters) - Spain will implement a 3 percentage-point hike to the value-added tax rate on August 1, a government source said on Wednesday.
Spain's Prime Minister Mariano Rajoy gestures during a parliamentary session in Madrid, July 11, 2012. Rajoy said on Wednesday he would raise the value-added tax by 3 percentage points to 21 percent as part of a large package of tax hikes and spending cuts aimed at trimming the public budget by 65 billion euros over the next 2-1/2 years. With the economy in recession, unemployment high and tax income falling, Spain is struggling to meet tough deficit cutting targets that it has agreed on with the European Union. REUTERS/Andrea Comas
The main rate of value-added tax on goods and services will rise to 21 percent from 18 percent.
Prime Minister Mariano Rajoy announced in parliament a raft of new taxes and spending cuts designed to slash 65 billion euros from the budget deficit by 2014 as recession-plagued Spain struggles to meet tough targets agreed with Europe.
Reporting by Fiona Ortiz; Editing by Tracy Rucinski