Nobody likes a VAT increase. Not the government, which delayed approving the tax hike until the EU mandated it in exchange for a financial sector bailout. Not Spanish companies. Not Spanish consumers.
The tax is being adopted because compared to other EU nations, Spain benefited from a lower-than average VAT for several years and because it will impact the economy less than a personal income tax increase.
Still, small business, tourism and consumers will be hit hardest. Many won't survive as the tax produces a wave of layoffs.
Fortunately, the tourism sector escaped the impact of the tax this year, because it was postponed until September. The key indicator to gauge the success of the tax will be whether it actually increases instead of decreases tax revenues, which happened to Portugal.
