MADRID, Jan 29 (Reuters) - Spain said on Tuesday it beat revenue targets for 2012 as tax hikes offset a shrinking economy, and repeated its commitment to cut spending even as Europe said it may give the country more time to trim its deficit due to the recession.
The Spanish central government’s non-financial revenue, after transfers to regional governments, was 123 billion euros ($166 billion) last year, more than the 119 billion euros targeted in the 2012 budget, Treasury Minister Cristobal Montoro said at a news conference.
Measures taken by the government meant that tax revenue had recovered from a steep fall between 2007 and 2009 when Spain began its ongoing economic crisis after the bottom fell out of the housing market, he said.
Despite a recession, flagging consumer spending and 26 percent unemployment, tax revenue rose by 11 billion euros in 2012 compared with 2011, due to higher value-added tax (VAT), income tax and corporate tax.
Corporate tax revenue rose more than 29 percent in 2012 from 2011, the minister said.
The likelihood of a sovereign bail-out for Spain is receeding since the European Central Bank said it would act as a backstop to bets against the euro, lessening borrowing costs for Europe’s fourth-largest economy.
On Monday, the European Union’s Economic and Monetary Affairs Commissioner Olli Rehn said fiscal targets could be pushed further out if the economy was found to have worsened, while praising Spain’s efforts to cut its deficit.
Spain has already been given an extra year, until 2014, to meet Europe-agreed goals of a deficit of under 3 percent of gross domestic product.
The government has cut billions of euros of spending across the board, even in politically sensitive areas like education and health.