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Popular Party blames tax hikes on flawed inheritance

Finance minister claims Socialists hid real deficit figure as crisis package is passed by conservative majority in Congress

Less than a month after Popular Party (PP) Prime Minister Mariano Rajoy pledged in Congress not to hark back to the ways of the previous administration, his finance minister, Cristóbal Montoro, did precisely that to justify the surprise tax hikes unveiled by the new Popular Party government at the end of last year.

Montoro accused the Socialist government of having falsified and hidden figures in its failure to meet the deficit-reduction target of six percent of GDP, the imperative the administration appealed to when it unveiled the hikes in personal income tax and the municipal tax (IBI), along with spending cuts, to remedy the damaged property it claimed to have inherited.

Montoro reiterated the PP's defense that it only knew about the two-percentage-point shortfall in the deficit target until after it had taken office, despite Rajoy having praised the briefings received from the Socialists during the handover period as exemplary.

More information
Rajoy breaks silence over tax hikes, saying government "had no option"
Moody's estimates Spain needs to find savings of 40 billion euros to meet budget deficit target

"If the new government knew about [the deficit overshoot] right after taking over, it is obvious the previous government also knew about it and wasn't able to explain it to Spaniards nor in parliament to the incoming government," Montoro said. "Surely, there were technical services that drew their attention to it."

Rajoy's contribution to the debate in Congress on the deficit-busting measures was conspicuous by its absence, while Montoro adopted a tone more fitting of an opposition spokesman than a minister defending a policy decision which he insisted would be reversed once the economy was back on its feet. That will be some time down the road as Montoro warned that a renewed recession being "at the door."

With an absolute majority in Congress, there was never any doubt the tax and cutback measures would be passed, in this case by 197 votes to 138, with four abstentions.

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