With consumers spending less in the recession it is inevitable that there will be job losses and it is factors such as these that are to blame for the pending tax increase that will affect every tax-payer in the province of Malaga, with an estimated cost of 500 euros per year to come out of their pockets. Put into context, that is over half of the average monthly salary for workers in the area.

The Spanish government addressed the matter by ‘asking’ the country’s tax-payers to “make an effort of solidarity” to enable them to “attend to its growing social costs.” It has been reported that this move will fund the state with an additional 115,000,000 euros.

As is usually the case, it will be the middle-of-the-road incomes that will see the most dramatic effects, as the increase will affect “everything from the purchase of a new car (which, according to the industry will cost an extra 420 euros on average) to signing a mortgage on a new house (which will cost an average of 2,000 euros more, according to the Association of Property Developers).”

Not only will it affect those costs mentioned above, the increase will also be felt through the increase of IVA, which will make even the smaller items purchased seem more expensive, seeing the price of everything from toothpaste, new clothes and electronic devices and appliances to a night out or a meal in a restaurant increase.

These increases will be implemented from 1st July 2010 with the normal IVA to increase by 2% from 16 to 18%. The reduced rate will be increased from 7% to 8%, this affecting foods, restaurants, property and transport.

A more detailed breakdown can be found at: http://www.surinenglish.com/20091101/news/costasol-malaga/governments-hikes-will-cost-200911011230.html