I wish politicians would just come clean. After four years of recession I think we can deal with bad news. Mariano Rajoy, the new Spanish Prime Minister, has announced plans to raise taxes because yet another black hole has been discovered in Spanish finances. He said that it was the only option. Rajoy could have raised the VAT rate, frozen pensions or reduced unemployment benefit. He said that more taxes on those in work was the only way forward and he is probably right. Those in employment are already facing the brunt of the recession. Wages have not risen but cost of living has.
The Spanish workforce has seen their costs rise dramatically and now they are rewarded with yet another tax increase. The Spanish government is going to have little option but to announce further cuts in public spending projects as it wrestles with the full extent of the financial crisis. At the same time I think Rajoy should start looking at Spain´s small army of civil servants. Those working in the private sector have been hit hard over recent years and I believe that civil servants have escaped quite lightly. Unfortunately, they have very strong unions which have so far resisted any call for change from the government. It was even suggested that Civil Servants should work longer hours but I think this proposal has been shelved because of the unions. Those who work for private companies face a major burden and I don´t think they will be able to carry yet more tax increases.