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Today members of the Spanish government announced new austerity and growth measures aimed to help Spain meet its deficit-reducing goals.However, a temporary reduction in the tax on new home sales was the biggest news to come out of an emergency Ministry of Public Works meeting.
According to government spokesman Jose Blanco, the ministry intends to “reactivate the construction sector” and “contribute to the job creation in the sector most damaged” by unemployment by reducing the VAT tax on new homes from 8% to 4% from now until December 31.
This tax cut comes on the heels of incredibly poor construction numbers released by the European Central Bank yesterday, which indicated that Spain’s construction output was down 43.7% from Q2 in 2010 and 26.7% from the first quarter this year.
In contrast, an increase in local taxes large companies must pay and the eradication of measures to force pharmacies to prescribe generic pharmaceuticals are meant to increase tax revenue and decrease spending.
Blanco predicted that the pharmaceutical law alone will save the country’s autonomous regions €2.4 billion ($3.5 billion) and consumers €150 million ($216 million). Spanish local governments are in terrible shape right now.