Minister of Finance Cristóbal Montoro made statements yesterday justifying an increase to the VAT and cuts to government payrolls, causing uproar across Spain. After his harsh prediction -- "if tax revenues don't increase, we run the risk of not paying government salaries" -- he obscured a harsher reality: the coffers are empty.
Spanish citizens need to admit that their national and regional governments are in serious trouble. The regions are a major cause of the problems, and they should do a better job at meeting their fiscal obligations.
The national government will present its macroeconomic forecast and spending ceiling for the 2013 fiscal year on Friday. The forecasts will scream recession. As the government faces the reality of the year ahead, it should totally revamp public spending.
