Zapatero's Plan B raises taxes

According to official sources, the federal government is preparing a Plan B just in case the Spanish economy worsens even further during the next few weeks. If it is necessary to adopt a Plan B, it would be finalized in the second week of August so that the government could send it to parliament immediately.

"The tension could last a few more days," she added at the end of an urgent meeting that Prime Minister Zapatero called for his economic advisory team. The team met to analyze recent market events.

Raising taxes on hydrocarbons is an imminent measure, despite there being no provisions for this in the 2012 federal budget. A directive from the EU is making Spain raise this tax class before January 1, 2012. Currently Spain's hydrocarbon tax rate is less than the EU average.

In either case, the government is acting prudently. "There is some room for worry, but I don't think the situation is extremely serious," said Elena Salgado, vice president of economic issues.

In 2011 the federal and regional collected an impressive 4.63 billion euros from this tax. The Agencia Tributaria's latest collection data indicates that they brought in 5.1% less than they did in June due to a 4.7% drop in carbon consumption nationwide.

Raising the hydrocarbon tax, a move that could be approved in ministry advisory meetings in August, might go hand in hand with hikes to special taxes on liquor, beer, tobacco and electricity. All these taxes are part of the government's Plan B, which it has held back since Q4 of 2010.