FINANCIAL CRISIS

Spain’s deficit nears maximum level agreed with Brussels

Government may eliminate tax break on house buying it reintroduced six months ago Tax revenue down from consumer-related spending during first five months of 2012

Despite tough action being taken by Prime Minister Mariano Rajoy, Spain’s deficit rose during the first five months of the year compared to the same period in 2011, a top budget official said on Tuesday.

The deficit up until May was listed at 3.41 percent of GDP — just 0.9 percent below the ceiling figure Spain pledged Brussels it would meet by the end of 2012.

Spain was 36.364 billion euros in the red at the end of May, said Marta Fernández Currás, the official in charge of the budget. The figure is 30.6 percent more than it was for the same period last year. She attributed the high figure to the drop in tax revenues, mainly relating to consumer spending. “We are in the middle of the worst moment in the financial year,” she said.

Meanwhile, Rajoy administration officials acknowledged on Tuesday that among the new measures they are studying to help the government get its finances back on track is the elimination of the tax deduction for the purchase of a new home — a recommendation made by the European Commission. The deduction had been eliminated by the preceding Socialist government but was reintroduced by Rajoy six months ago. Public Works Minister Ana Pastor assured two months ago that the government would not eliminate it.

The government also acknowledged that it is studying “a green tax” to help promote renewable energies.

In Brussels, European finance ministers were meeting at press time to discuss coming up with a common fiscal and banking policy that will be discussed during Wednesday’s meeting of the leaders of Germany, Spain, Italy and France.

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