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European Commission calls on Spain for VAT hike, pension reform

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(Globalpost/GlobalPost)

Brussels, Mar 5 (EFE).- The European Commission on Tuesday called once again on Spain to hike the value-added tax (VAT) and move forward with pension reforms aimed at raising the retirement age, as well as for more effective controls over regional government budgets.

It will be "very difficult" for Spain to achieve the goal of cutting its budget deficit to 2.8 percent of the gross domestic product (GDP) in 2014 and the timetable for hitting fiscal targets may have to be revised, the European Commission said in a report on the second review of the Spanish bank bailout.

"While the deficit of 6.7 percent of GDP in 2012 announced by the government in late February exceeds most forecasts, making the date for the deficit target in 2014 appears very difficult and a revision of the path ... cannot be ruled out," the commission said.

Spain must strengthen its tax system even more and the Social Security System's hole must be resolved, the commission said.

Spain has been mired in a deep recession since 2008 due to the financial crisis caused by the bursting of the real estate bubble.

http://www.globalpost.com/dispatch/news/agencia-efe/130305/european-commission-calls-spain-vat-hike-pension-reform