The Spanish Cabinet has approved the Government proposals to increase IVA (VAT) rates, remove the €400 income tax rebate and increase taxation on savings income as part of the State Budget.
Standard rate IVA is set to rise from 16% to 18% and the lower rate from 7% to 8%. Taxation of savings income (interest) will become progressive, the first €6,000 being taxed at 19%, the rest at 21%.
The package still has to be put before the Senate for approval, probably on Tuesday, but the Government is hoping for these new measures to begin on July 1st 2010.