Spain announced on Friday it would cut income tax and reduce corporate tax to 25 percent for large companies by 2016, aiming to speed up a nascent economic recovery. The cuts are part of a proposed bill that is Prime Minister Mariano Rajoy's main structural reform this year and also included reducing tax breaks to lift the country's tax revenue, currently one of the lowest in Europe.
The government said the plan will boost gross domestic product by 0.55 percent over the two years 2015 and 2016, but it has been roundly criticised by unions and economists as details of it were revealed over the last few months.
Unions say tax cuts are merely a populist measure ahead of elections next year while some economists say growth is not yet strong enough to justify tax cuts and the move risks hurting the government's ability to meet its budget deficit targets.
"The moment has come for the Spanish to be recompensed for the efforts that they've made," Treasury Minister Cristobal Montoro said at a press conference following the weekly cabinet meeting. "The moment has come to strengthen economic growth, stimulate savings, investment and job creation."
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