The relevant question for tax increases around the world was really a matter of when and not if. Now we know when. Faced with few alternatives, Spain plans to raise €11 billion from a combination of new tax initiatives and repealing existing rebates. In addition to joining the growing bandwagon of European economies increasing their VAT taxes, top income earners in Spain will be kicking in a bit more to help right the ship.
"We are aware of the collective effort we are asking for, but we are sure that the budget is the one this economy requires" to recover from the crisis, Vice President María Teresa Fernández de la Vega said Saturday, after the cabinet's approval of the 2010 budget proposal.
But things on this side of the Atlantic operate a bit differently. We don't tax out of desperation. We only tax when somebody in a position of power has given the signal that the recession is over and highly sought tax increases can be better justified. That move to reappoint the Beard 3 weeks before he gave the thumbs up seems to be working out really well for all involved.
Zapatero Unveils Budget Plan With Tax Increases [NYT]