Spain is suffering one of the worst economic situations of our times after it had enjoyed a few years with spectacular and enviable economic growth, as far as the rest of the European Union is concerned. Spain has, at this time, an extremely delicate economic situation and, more importantly, the government is not giving any response to the serious situation the country is experiencing.

The alarming unemployment figures of 3.6 million people or 18.5 % of the population, makes Spain a real unemployment factory and places it in first place within the European Union, where the average unemployment rate is 9.5%, according to the Statistical Office of the European Commission, Eurostat.

According to the International Monetary Fund (IMF), Spain will not start to grow above 2% until at least the year 2015. Although the government says that the worst part has passed, many people refuse it and forecast a long and severe winter and don’t see any improvements until 2011.

On the other hand the public deficit is increasing rapidly. The President of the Spanish government is uncontrollably creating new patches in attempt to fix the problem. He promises that the central government will provide financing to the autonomies, he has created a plan where more than 10,000 millions of Euros will be given to city halls to be invested in public works so "employment" can increase, but, from an economic point of view, this only means unproductive employment. In addition, he has given 400 Euros to all taxpayers and now is promising 420 Euros to the unemployed. This is going to cost the government over 100 million Euros monthly. There is an estimated deficit of 50,000 million Euros in the public accounts. According to the government and the ministry of the economy, the solution seems to be more taxes and that the rich pay them.

The government is studying various alternatives and has to reach an agreement with the other parties in order to pass a budget for next year. The tweaks to the budget could be the following:

1. The abolishment of or reduction in the deduction for home buyers, leaving only a certain portion of the population with fixed low rent.
2. Increase in the tobacco tax with the objective of protecting people’s health and also as a means to sustain the public accounts.
3. Increase in the gas tax, excluding for professional use. Furthermore, Spain already promised Brussels that they would increase this tax.
4. Increase VAT
5. Increase the savings tax.
6. Other figures that aren't yet determined and depend on the support that they get from the government.

Other countries like USA and Ireland have announced an increase in high profit taxes.

The president of the Bank of Spain says it is necessary to increase taxes, but also to reduce excessive public spending, in order to deal with the administration’s enormous public deficit. According to experts, Spain’s deficit has increased 10%.

On the other hand, the company representatives say that the government is making a big mistake by increasing taxes, especially the VAT, because it reduces consumption and competition amongst businesses. Experience demonstrates that even with the strongest fiscal pressure, less consumption, less investment and of course, less employment growth, that any given one will complicate recovery.

Other countries like Germany, in the midst of an election, are taking a look at a reduction for all taxpayers. Also, France wants to lower taxes for companies. Even Portugal has decided to decrease taxes on limited (public) companies from 25 to 12.5%