Spain’s opposition on Tuesday blasted Prime Minister Mariano Rajoy’s conservative government for campaigning for a June general election on promises to lower taxes as well as slashing the public deficit.
Rajoy has said he is eyeing more tax cuts if re-elected at the June 26 general election even as the European Commission mulls sanctions against Madrid for breaking deficit rules.
The head of the main opposition Socialists, Pedro Sanchez, accused the prime minister of “lying”, saying Spain’s fiscal situation does not allow for taxes to be reduced.
“He will once again trick Spaniards,” said Sanchez, who plans to raise taxes to balance the budget.
New anti-austerity party Podemos, which also wants to raise taxes so as to increase social spending, also lashed out at Rajoy.
“Fresh tax cuts are a danger for public services and it will commit us to budget cuts in the future,” Podemos economist Nacho Alvarez told top-selling Spanish daily newspaper El Pais.
Podemos has formed an alliance with its smaller far-left rival Izquierda Unida to run together in the elections and polls show it is poised to surpass the Socialists in the upcoming election to finish second.
Meanwhile Albert Rivera, the head of new market-friendly party Ciudadanos which is seen as a natural ally for the conservatives, advised Rajoy “to not make promises he can’t keep”.
Rajoy’s Popular Party (PP) has made its handling of the economy the focus of its campaign.
The PP credits its reforms for returning Spain to growth in 2013 after a property bubble burst in 2008.
The party came in first in an inconclusive December 20 general election but lost its absolute majority in parliament and was unable to form a governing coalition with other formations.
Both Ciudadanos and the Socialists refused to join forces with the PP, whose image has been tainted by a string of corruption scandals and austerity measures.
No other party was able to cobble together a coalition, leading to the repeat election next month.
July decision on fine
Rajoy, in power since December 2011, has also vowed to continue to reduce unemployment.
Under his watch the unemployment rate has fallen from 27 percent at the height of Spain’s economic crisis to just below 21 percent, although it remains the highest in the European Union after Greece’s.
The Spanish economy, the eurozone’s fourth largest, expanded by 3.2 percent last year, well above the European average.
But despite the return to growth Spain’s public deficit came in at 5.0 percent of gross domestic product last year, far higher than the target of 4.2 percent Madrid agreed with Brussels and vastly above the 3.0 percent limit set by eurozone rules.
The European Commission will decide in July — after the elections — if it slaps Spain with a fine for violating its deficit rules.
Rajoy has promised Brussels to take steps to reduce the deficit if he is re-elected, according to a letter that was made public by El Pais.
The PP, which reduced taxes in 2015 just before the december election, argues tax cuts will raise consumer spending and boost job creation.
“The goal of reducing the deficit is perfectly compatible with the reduction of income taxes,” Economy Minister Luis de Guindos said.
Polls predict the result of the June election will be similar to that of the December election with the PP in first place, followed by the Socialists and Podemos neck and neck with Ciudadanos in fourth place.
Many analysts predict that this time round the Socialists and Ciudadanos will allow the PP to form a minority government.