The Spanish government does not think to increase indirect taxation, despite advice to boost value-added tax revenues from the International Monetary Fund. On July 10, 2014, a report of IMF urged the Spanish government to increase excise duties and environmental levies, and systematically reduce preferential value-added tax rates to bring its tax gap into line with other European states.
Spain’s secretary of state for economic and business support, Fernando Jiménez Latorre said that an increase in the headline VAT rate is required as the effects of an earlier increase are still settling in. In 2012 the government raised the headline rate from 18 percent to 21 percent, and the reduced rate was increased from 8 percent to 10 percent. At the same time, the individual income tax changes up to EUR12,450 (USD16,950) to 20 percent from 2015, and to 19 percent from 2016 as a step to boost job creation. This compares with the current rate of 24.75 percent, which applies to income up to EUR17,707.
