The European Commission (EC) asked Spain to raise sales tax in order to combat the excessive fiscal deficit of the country, media reports said on Tuesday.
The report includes conclusions from European Union (EU) inspectors who visited Spain between Jan. 28 and Feb. 1 in order to analyze the credit line for the Spanish banking sector.
The EC praised the rises in sales tax implemented last September 2012, when the standard one increased from 18 percent to 21 percent and the reduced one from 8 percent to 10 percent, however, the report concludes environmental taxes could increase further while the reduced level of sales tax should be less widely implemented.
Brussels also asked the Spanish central government to control the regional authorities which fail to meet deficit target: something six of the country's regional governments failed to do in 2012.
The EC also warned about the high social security deficit which has reached one percent of GDP, the EU suggests further raising the age of retirement to help counteract the imbalance.
Spain's labor market continues to be a preoccupation for the EU, which does believe the labor reform implemented a year ago could start to show positive effects, although the labor market is still weak and requires a continue revision of the reform implementation.
February saw unemployment increase in Spain by 59,444 people passing for the five million mark for the first time in history, according to the Ministry of Employment, although the National Institute of Statistics (INE), which uses a different method of calculation, said 2012 left almost six million people out of work in the country.
The EC for increased spending on training and labor market integration, while modernizing employment public services and improving coordination between state and regional levels.
These recommendations come 24 hours after vice-president of the EC Joaquin Almunia said Brussels would take into account the continuity of the reforms in Spain to adjust a new calendar about the deficit that will be settled in a few weeks.
Spain ended 2012 with a public deficit of 6.7 percent of GDP, without taking into account public assistance to the banking sector, which would have lifted the deficit to around 10 percent of GDP, above the 6.3 percent required by the EU for 2012.
