Despite the EU demanding that Spain increases the level of IVA (VAT for the Brits!), President Rajoy has firmly refused to comtemplate the increase.
However, the Minister for the Economy, De Guindos, has refused to rule out a possible increase in 2013.
Spain is currently about 0,5% off the budget reduction target demanded by the EU, and the Eurozone had suggested that increasing IVA would be the quickest way to make up the shortfall.
But Madrid has said that increasing IVA at this moment would damage the economic recovery, and has instead said it intends to further reduce central government spending in order to hit the EU targets.
A reduction in the size of Spains armed forces has been mooted by the Defence Minister, who last week admitted he was studying a large reduction in troop numbers in order to cut a large amount from Spains annual defence bill.