Brace yourself for more price rises ...

Alcalaina · #1 (**permalink**) 28th June 2012, 10:56 AM

The European Commission and the IMF have recommended that Spain adjust VAT on certain products and services. Prime Minister Mariano Rajoy has been insisting that he won’t raise VAT from its current 18-percent rate. But there's another way of doing it:

Quote:

Government sources said Monday that the Finance Ministry is studying areas where it can apply the value-added tax (VAT) hikes that have been recommended by Brussels.

Spaniards could soon be paying up to 18 percent on certain goods and services that currently fall under a reduced and super-reduced rate.

The current reduced eight-percent rate is applied to the majority of food and sanitary products, ground transport, and concert, movie and museum tickets. The super-reduced four-percent rate is for basic foodstuffs, such as milk, fruit and vegetables.

Government considering hike in reduced rate of VAT | In English | EL PAÍS

jojo · #2 (**permalink**) 28th June 2012, 11:00 AM

Quote:

Originally Posted by Alcalaina

The European Commission and the IMF have recommended that Spain adjust VAT on certain products and services. Prime Minister Mariano Rajoy has been insisting that he won’t raise VAT from its current 18-percent rate. But there's another way of doing it:

Government considering hike in reduced rate of VAT | In English | EL PAÍS

They could certainly put the price of cigarettes and booze up!

Jo xxx

thrax · #3 (**permalink**) 28th June 2012, 11:17 AM

Cigarettes yes, but booze??? hmmmmm just hold on to your horses JoJo. Although, thinking about it, they could put up the price of sweet sherry, vodka and Campari as I don't like those.

PokAlice · #4 (**permalink**) 28th June 2012, 11:25 AM

I think the lower VAT rate currently also applies to hotel rates. If they raise those that would have a further impact on tourism.

Alcalaina · #5 (**permalink**) 28th June 2012, 12:16 PM

The taxes (duty) on tobacco, alcohol and fuel aren't subject to the 18% IVA. They are set separately, as in the UK, and are much higher - 80% on fags I think.

Yes, I think hotels are currently on the 8% rate. Portugal raised its tax on hotels and restaurants recently to 23% and establishments were forced to cut costs and lay off staff in order to stay competitive. That's not going to help the Spanish economy either.

mrypg9 · #6 (**permalink**) 28th June 2012, 03:43 PM

Quote:

Originally Posted by jojo

They could certainly put the price of cigarettes and booze up!

Jo xxx

I have no problem with that.

jimenato · #7 (**permalink**) 28th June 2012, 04:41 PM

Quote:

Originally Posted by Alcalaina

The taxes (duty) on tobacco, alcohol and fuel aren't subject to the 18% IVA. They are set separately, as in the UK, and are much higher - 80% on fags I think.

Yes, I think hotels are currently on the 8% rate. Portugal raised its tax on hotels and restaurants recently to 23% and establishments were forced to cut costs and lay off staff in order to stay competitive. That's not going to help the Spanish economy either.

I think this is more accurate;

Tobacco, alcohol and fuel are subject to excise duty (at a high %). Then IVA is imposed - both on the goods and on the excise duty - so IVA is a tax on a tax.

jimenato · #8 (**permalink**) 28th June 2012, 04:43 PM

Quote:

Originally Posted by mrypg9

I have no problem with that.

Nor me

Alcalaina · #9 (**permalink**) 28th June 2012, 05:51 PM

Quote:

Originally Posted by jimenato

I think this is more accurate;

Tobacco, alcohol and fuel are subject to excise duty (at a high %). Then IVA is imposed - both on the goods and on the excise duty - so IVA is a tax on a tax.

Thank you!

I don't have a problem with this either, as long as I can get a drinkable bottle of vino tinto for under €3.

But increasing the 4% rate on basic foodstuffs etc would be a disaster for some households.

jojo · #10 (**permalink**) 28th June 2012, 05:57 PM

Quote:

Originally Posted by Alcalaina

Thank you!

I don't have a problem with this either, as long as I can get a drinkable bottle of vino tinto for under €3.

But increasing the 4% rate on basic foodstuffs etc would be a disaster for some households.

In the UK a decent bottle of vino tinto would cost just under £10, more for a good one. An average bottle would be about £5 (I dont drink, but I sell it where I work). ciggies are around £7! So Spain could easily wack those up. Times are hard and now isnt the time for worrying about having to pay more for a tipple or a fag!

Fuel I dont think should be raised any higher in either country cos that is a cost that affects everything else. Neither should basic food items

Jo xxx