Despite Public Protests, Spain’s 2013 Budget Plan Includes More Austerity

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The New York Times
Friday, September 28, 2012

Despite Public Protests, Spain’s 2013 Budget Plan Includes More Austerity

By RAPHAEL MINDER

MADRID — The Spanish government on Thursday presented a draft budget for 2013 with a package of tax increases and spending cuts that it said would guarantee the country could meet deficit-cutting targets agreed to with the rest of the euro zone.

Because the Prime Minister Mariano Rajoy’s Popular Party controls Parliament, the budget is expected to be adopted within the next few weeks. But with current austerity measures already prompting street demonstrations amid high unemployment and a recession, there is little likelihood that the new budget will do anything to calm a restive public.

Facing down independent-minded Catalonia, the central government warned Thursday that it would fight any breakaway attempt by the region, the most economically powerful among Spain’s 17 semiautonomous regions. Artur Mas, Catalonia’s leader, called this week for regional elections in November and suggested that Catalan citizens had the right to decide whether they wanted to secede from Spain.

Spain’s deputy prime minister, Soraya Sáenz de Santamaría, said Thursday that there were legal and constitutional provisions to forbid a region from holding a referendum and that “this government is ready to use them.”

The 2013 budget plan released Thursday is meant to help carry out a sweeping long-term austerity package outlined by Mr. Rajoy in July, which is aimed at reducing the central government’s budget deficit by 65 billion euros, or $84 billion, over two and a half years.

The plan involves an average cut of almost 9 percent in the spending of each government ministry next year. The salaries of civil servants will be frozen for a third consecutive year.

In a specific gesture toward older people and one made to maintain one of Mr. Rajoy’s pledges, the 2013 budget includes a 1 percent increase in pension payments. Several economists, however, have suggested that Madrid would eventually need to cut pension payments to stick to its budgetary targets.

As expected, the new measures would include removing a tax break for home purchases. In a surprise move, the budget proposal calls for raising the tax on lottery winnings — though it is not a move that would affect many people in a significant way. In total, the government said the tax measures would increase revenue by 4.4 billion euros next year.

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