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2012 Will Be Last of Crisis for Spain, Says García-Legaz

Posted on by peteradmin247

crisis The Spanish Secretary of State for Trade, Jaime García-Legaz, said yesterday that there is  “light at the end of the tunnel”

and that 2012 will be the last year of crisis in Spain. He also said that if the Government raises VAT then, at the same time, it will lower social security contributions as compensation.

García-Legaz stressed that it is not only the Government saying this, but also the big Spanish companies, who point to a GDP growth in 2013, and the International Monetary Fund, which predicts that Spain will leave the crisis in the next year. “Doing what we are doing, we will come out of it,” he stressed.

García-Legaz went on to say that, as announced by the Government, adjustments in government spending “will have to follow” and that they will have to “persevere” with them in order to meet Spain’s commitments with Brussels on cutting the deficit. “If we do not comply, we will lose the confidence of international investors. It is therefore essential to continue with the adjustment of public spending,” he stressed.

With reference to the debate on austerity and growth, the Secretary of State for Trade emphasised that “at this point” it should be understood that spending more does not bring more economic growth. Thus he made it clear that growth “will not come from expenditure, but from the structural reforms” that the Government is undertaking.

VAT Hike

El Economista reported that García-Legaz also referred to the possibility that the Government will raise VAT, and said that the Ministry of Finance is analysing the data and “will decide” when it is deemed appropriate.

In any case, the Secretary of State for Trade stated that in the event of a decision to raise VAT, social security contributions will be rolled back simultaneously as compensation, a measure which, he pointed out, the business sector has been demanding for a while.

“This is what is called fiscal devaluation. If we lower the contributions and they are offset by the VAT, the cost of goods will lower. It is a gain in competitiveness for our products and without a doubt that is something that we need”, he stated.

Finally, when asked if tolls on motorways are to be implemented, García-Legaz indicated that the decision on this is to be taken by the Ministry of Development, but he pointed out that maintaining these roads is very expensive and that here it has to be decided whether the maintenance should be paid by all citizens through their taxes or only by those using the highways.

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