Spain announces tax cut plan

MADRID, June 21 (AFP): Spain revealed plans Monday for sweeping tax cuts to stimulate the economy and create new jobs in a nation still grappling with stubbornly high unemployment despite a return to growth.

Prime Minister Mariano Rajoy's government, which faces elections in 2015, said Spaniards should reap the reward for their sacrifices during a period of deficit-cutting austerity, which has prompted mass street protests.

Spain's economy, the fourth-largest in the eurozone, is slowly recovering after emerging from five years of stop-start recession prompted by a 2008 property crash, but unemployment remains at 26 per cent.

"The reform, after the efforts made by Spanish people confronted by the crisis, aims not only to compensate for those sacrifices but also to dynamise growth and job creation," Deputy Prime Minister Soraya Saenz de Santamaria told a news conference.

The proposed reforms will be published for public consultation before a final version goes to parliament, she said after a weekly cabinet meeting.

The conservative government plans to cut the lowest income tax rate on people earning less than 12,450 euros ($16,900) a year from 24.75 per cent in 2014 to 20 per cent in 2015 and 19 per cent in 2016.

The top rate for those earning 60,000 euros or more a year would be cut from 52 per cent in 2014 to 47 per cent in 2015 and 45 per cent in 2016.