Spain Unveils Sweeping Cuts on Income, Corporate Taxes

Spain Unveils Sweeping Cuts on Income, Corporate Taxes, by David Román.

Spanish leaders who broke their no-new-taxes pledge after taking office 2½ years ago announced sweeping tax cuts on Friday, saying it was time to compensate a recession-battered populace for its sacrifices and boost a nascent recovery.

Spain is following Reagan’s dictum that cutting high taxes not only stimulates the economy but may lead to a higher tax take.

Spain’s corporate tax rate would drop from 30% to 25% by 2016. People earning more than €300,000 ($408,000) a year would see their personal income-tax rate fall from 52%, one of the highest in Europe, to 45% in 2016. …

Officials say the economy is growing fast enough that tax revenue will continue to rise even as tax rates fall.

In Australia, the company tax rate was last cut from 34 per cent to 30 per cent by the Howard government in 2001. The Coalition is promising small reductions, while Labor is rejecting any cuts.

Spain plots huge tax giveaway despite trillion Euro debt, by Jason Taylor.

The cash-strapped nation – which now owes more money than its entire economy generates in a year – is plotting the bonanza at a time when it spends £38 billion annually on debt interest payments.

Other nations are said to be furious with the Spanish Prime Minister, especially Germany, which believes “fiscal recklessness” was the root cause of the the post-2008 debt crisis.

The EU wants all countries, especially those in the single currency, to keep their budget deficits below 3 percent of their annual GDP and has set targets for those not meeting the limit.

But although countries can be fined up to 0.2 percent of their GDP if they fail to implement measures to meet the limits. Spain’s defect is running at five per cent, but Eurocrats confirmed today Spain would not be fined.

hat-tip Matthew