Spain to raise taxes for wealthy, premier says

[May 19, 2010]  MADRID (AP) -- Spain will raise taxes for high-income earners to help chip away at the country's outsized deficit, the prime minister said Wednesday.

Jose Luis Rodriguez Zapatero said most Spaniards agree with him that a special effort can be expected from those better off as the government enacts austerity measures, such as cutting the salaries of civil servants and freezing pensions.

Zapatero gave no details of his tax plans, but said any increase would be of a "limited" nature and would not affect the middle class.

"In my opinion, any citizen feels that the effort should be greater from those who have more," Zapatero told a news conference during an EU meeting with Andean countries.

The government will propose the increase when it "deems it appropriate, in line with its program for deficit reduction."

Zapatero's government announced the public sector wage cuts and other spending reductions last week under pressure from the European Union and jittery markets to get Spain's deficit down. Last year's deficit stood at 11.2 percent of gross domestic product, well above an EU limit of 3 percent.

Zapatero's cuts -- also affecting government investment, overseas aid and other spending -- are designed to save euro15 billion this year and next.

The Cabinet is expected to approve the spending cuts in a decree on Thursday.

[Associated Press; By DANIEL WOOLLS]

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