"We're going to lower all income taxes, but proportionately ... and progressively"
- Cristobal Montoro, Spain's Treasury Minister
It was a relatively good year for Europe, as it has emerged from its longest-ever recession in the second quarter, while separate countries are recovering as well. Another welcoming sign is Spanish government's decision to reduce the income tax for low-income Spaniards in 2014, as a part of a sweeping fiscal reform. However, citizens in higher income brackets will not get the same privilege until the economy emerges from a prolonged economic crisis. Tax system overhaul is one of the main priorities for the Spanish government in 2014, which already pledged to cut tax for low income people between 2015 and 2017. At the same time, the government aims at increasing corporate tax intake, which is currently one of the lowest in Europe, being at around 8%. There are no planned changes to a value-added tax, which was already increased by 3% last year.
Cristobal Montoro, Treasury Minister, also said that planned fiscal reforms are not just about raising rates in order to increase budget revenues, but about boosting growth in the struggling economy, and as a result generate higher revenue. Earlier this month ratings agencies Moody's and S&P have revised Spanish outlook from "negative" to "stable". The economy was lifted out of its recession between July-to-September period, with GDP advancing 0.1%.
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