Income from sales tax increases in Spain

MADRID - Spanish Treasury Minister Cristobal Montoro on Tuesday said earnings from sales tax increased by 11.9 percent in the month of September.

Sales tax on a majority of goods rose from 18 to 21 percent at the start of September, with the lower brackets of sales tax increasing from 8 percent to 21 percent.

Among some of the items most affected were school materials, with the exception of text books where taxes rose from 4 percent to 21 percent just before the school year.

"Sales tax in its first month since its increase has seen an 11.9 percent in income, after a 10 percent fall in August," said Montoro, who added that despite the new measures as a result of the recession and a fall in consumer spending, income from sales tax fell by 5 percent in the first nine months of the year.

The news comes a day after data published by that Spanish National Institute of Statistics showed that the increase in sales tax had a detrimental effect on large and small shops with sales volumes in September falling by 12.6 percent compared to a year earlier.

Sales between August and September this year fell by 9.6 percent. Sales usually pick up in September as Spaniards return home from holidays return to their routines.

Small shopkeepers bore the brunt of the cutback in consumer spending with single-shop businesses seeing their earnings decline by 15.3 percent in comparison with large chainstores where earnings were down by 5.5 percent.

Montoro added there had been a 2.9 percent in income tax over the year, despite more people out of work. He said the trends proved it was possible for Spain's public administrations to finish the year by reaching their deficit objective of 6.3 percent.

Opposition groups rejected Montoro's statement, with the Socialists claiming the measures led to "an increment in inequality." They alleged the government's fiscal amnesty for tax evasion was allowing the rich to escape their obligations while placing a burden on ordinary Spaniards.