“A higher minimum wage but a higher tax bill...difficult balancing act...” | - EFE

Difficult times for the Spanish economy and at the moment there appears to be a “Robin Hood” attitude from the Spanish government. In a much-billed policy the government raised the minimum wage reaching the 1,000 euro mark. Obviously, it was well received. But this week the government decided to raise the tax rate which could cost every employee in the Balearics at least 200 euros per year.

The reason for the tax rise is inflation which is running wild at the moment. As an example, the price of butter has doubled in the last few months along with many other food stuffs. Spanish families are struggling because of higher costs and it must be remembered that some companies are still struggling to shake off the full impact of the pandemic.

Spain has applied for substantial sums of money from the European Union in loans and grants. This cash should help lift the Spanish economy but perhaps it would be better spent on helping Spaniards cope with the massive increase in fuel bills? The self employed also deserve help. They suffered badly during the economic slowdown caused by the pandemic and thousands were forced to stop trading.

It is a difficult economic balancing act and there is no easy solution. The economic recovery will mean more cash in the economy but inflation should be a major worry. Raising taxes is a more unpopular move and the government must be careful not to hit consumer confidence.