Spain says tax court ruling won't affect deficit

A Spanish court ruling that declared invalid sales tax revenue settlements over a three-year period, which one union estimated to top $6 billion, will not affect public accounts, the Economy Ministry said yesterday.

The court made a ruling in June that declared some sales tax settlements from 2006 to 2008 invalid due to a change in how the tax was calculated, the ministry said in a statement.

The ruling likely meant a delay in the collection of a few hundred thousand euros, a spokesman for the tax office told Reuters, although he declined to give an exact figure for the sum involved.

Economy Minister Elena Salgado said the ruling had no implication for the state deficit and simply meant a few thousand tax settlements have to be recalculated. “There is no risk of damage to the public treasury,” she said at a press conference following a government meeting.
The ruling would not lead to any shortfall in the state's accounts because the taxes had not yet been collected, so there was no pay-back implied, and taxes would be freshly calculated under the new criteria, the ministry said.

Spain has imposed strict austerity measures to bring down its public deficit in a bid to avert market fears it may suffer a debt crisis similar to Greece.

The Mediterranean country, one of several so-called peripheral euro zone nations at the centre of fears about the viability of the euro currency, aims to reduce its total public deficit to 3 percent of gross domestic product by 2013 from 11.2 percent in 2009, in line with European Union guidelines.

The 10-year Spanish/German government bond yield spread widened by 3 basis points on the day to 181 basis points - its widest since July 16.