Spain's Rajoy eyes tax cuts despite EU deficit sanctions threat
Spain's acting Prime Minister Mariano Rajoy said in a Wednesday interview he was eyeing more tax cuts if re-elected, just as Brussels mulls sanctions against Madrid for breaking deficit rules.
"We raised taxes at the start of our term in office, and we lowered both income and corporate tax in 2015," Rajoy told the Financial Times.
"If tax revenues continue to rise, as they are doing now, we can plan another tax cut."
His comments come just as Brussels is due to decide whether to sanction Spain and Portugal over their high public deficits.
Spain's deficit came in at 5 percent of gross domestic product last year, far higher than the 4.2 percent initially predicted by Rajoy's ruling conservative Popular Party (PP) and vastly above the 3 percent limit set by eurozone rules.
This was the eighth consecutive year that Spain overshot its fiscal target, making it one of the worst performers in the eurozone.
And Madrid has raised its public deficit target this year from 2.8 percent of GDP to 3.6 percent, which means Spain will once again fall short of the limit set by Brussels.
Rajoy's tax plans come as he gears up for another election on June 26 -- the second in just six months after bickering parties failed to reach an agreement on a coalition government following inconclusive polls in December.
The PP came first in those elections but fell far short of an absolute parliamentary majority as two new upstarts -- far-left Podemos and centrist Ciudadanos -- took votes away from the conservatives and Socialists.
Rajoy's pre-election comments are likely to anger Brussels just as EU commissioners meet Wednesday to discuss taking action over Spain's public deficit.
But Spanish Foreign Minister Jose Manuel Garcia-Margallo said Wednesday he was confident that Madrid would avoid any financial penalties.
"I don't think there will be a fine," he told public television TVE.
"I think we need to continue to make adjustments, but I think we need to do them within the framework of a more flexible calendar," he added.