VAT Increase Backfires in Spain, Supermarket Sales Plunge 7.2%

The nannycrats in Brussels and the IMF keep pressuring Spain to hike the VAT and Spain does every time. The results are easily predictable.

Via translate from El Econimista, please consider VAT Rise is "Catastrophic"

Anged, the "Association of Large Distribution Companies" suffered a 7.2% drop in sales through August, the biggest drop in sales since the crisis began. Anged companies include El Corte Ingles, Carrefour, Auchan, Tesco, Ikea, Media Markt, Leroy Merlin and Toys R'Us.

Employer, Alfonso Merry del Val, said the increase in VAT has been "catastrophic".

Data from the National Statistics Institute (INE) show that sales in supermarkets were down  7.2% through August and the crisis is deepening.

Apart from the increase in VAT, the Anged president was particularly critical of the rate that some regions have tax supermarkets activity. "It's a revolutionary tax. If not corrected, 18,000 jobs and more than 200 million of investments per year are in grave danger of disappearing," he said.

VAT History

Inquiring minds may wish to revisit my September 5, 2012 post: Spain VAT Hike Largest In History; Stunning Ineptitude Will Make History Books

IMF Recommendation

Given the stunning "success" of the 2012 VAT hike, the safe thing to do is expect more "success". And sure enough, just five days ago the IMF proposed Spain hike the VAT again.

Via translation from Libre Mercado, please consider IMF recommends Spain to raise the VAT

The International Monetary Fund (IMF) said Wednesday that Spain has room "to better raise taxes" and increase the scope of VAT in order to increase revenue. Michael Keen, director of IMF fiscal affairs, said during the presentation of the Fund's fiscal report that Spain "has not used too much VAT tax" to increase income and has the potential to improve the "composition" of the excise tax.

If Spain hikes the VAT, we can expect still more "success".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com