VAT hike adds to Spanish woes

2012-09-01 11

A typical Saturday at Mercado de las Ventas - one of Madrid's largest markets.

But many stall owners and shoppers here - already hit by tough austerity measures - will be feeling the pinch after a VAT tax hike came into force today across Spain.

VAT on meat and fish increased from 8 to 10 percent though essentials like bread and milk stayed the same.

Many of these stall owners have opted to take the hit for now, but customers are still upset.

(SOUNDBITE) (Spanish) SHOPPER, WHO DECLINED TO GIVE HER NAME, SAYING:

"It's very bad, awful, awful. Prices will increase even more. They take it from our pockets. It hits all of us. So it's very bad, very bad, awful."

Art and culture institutions will bear the biggest rise, from 8 to 21 percent while petrol will rise 3 notches to 21 percent.

A Spanish consumer group says the increases will cost the average family an extra 54 euros a year.

The new rule comes as part of a raft of government measures to avoid a full-blown European bailout.

The euro zone debt crisis has battered Spain, which entered its second recession since 2009 earlier this year.

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