April 30, 2019 / 9:09 PM / 3 months ago

Spain projects 5.6 billion Euros fiscal hike with digital, financial taxes

MADRID (Reuters) - Spain plans to increase fiscal revenue by 5.6 billion euros in 2020 with new taxes, such as for digital services and financial transactions, the country’s acting Socialist government said on Tuesday.

FILE PHOTO: The Four Towers business district skyline is seen at sunset in Madrid, Spain November 18, 2017. REUTERS/Paul Hanna

The Socialists, who won national elections on Sunday, detailed the forecast in their four-year stability programme submitted to the European Commission.

The government plans to increase fiscal revenue by 1.7 billion by ending corporate tax exemptions, 1.2 billion with a digital levy and 850 million with a tax on the financial sector.

The fiscal increase would offset some tax cuts, such as to small companies.

In the programme, the government also projects weaker economic growth this year, of 2.2%, as the eurozone faces a slowdown, and said it expected the budget deficit to fall to 2% of Gross Domestic Product.

Last year, Europe’s fifth-largest economy grew by 2.6% and the public deficit closed at 2.48%.

The Socialist government had previously estimated 2019 growth at 2.2%, while targeting a deficit of 2%.

The previous stability programme administration had higher growth estimates of 2.4% for this year and 2.3% in 2020 and 2021.

It projected next year’s deficit to narrow to 1.1%, and in 2021 to 0.4%, and in 2022 the budget should be balanced at zero percent of GDP.

Spain’s budget has been subject to strict targets set by Brussels after tipping into deficit during the 2008 economic crisis.

Spain’s unemployment, one of the highest in the European Union, will drop to 9.9% by 2022, according to the programme. Last year it was 15.3%, according to preliminary government data. For 2019 the forecast is 13.8%.

Reporting By Joan Faus, writing by Andrei Khalip and Joan Faus; Editing by Richard Chang and Tom Brown

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