by Jason Moore

T HE Spanish government has stupidly raised the rate of Valued Added Tax, in some cases to 21 percent, at a time when many consumers have already cutback on their spending. The new rise will probably mean that they will cutback even further and dent any hope of a consumer-led recovery in the Spanish economy. There are many who would say that the government should cut taxes and cut the VAT rate to get consumers spending again; infact there is argument that the government would raise more money if VAT was lower rather than higher because consumers would spend more. On Friday night when I returned home I noticed that there were long queues outside petrol stations as drivers filled up their tanks before yet another rise in petrol prices. Consumers are being hit hard at the moment. Everything is getting more expensive. The Spanish government maybe short of cash but penalising consumers is not the way forward. Unfortunately, it will make matters worse.