Spain tax amnesty deal far from government target

MADRID (Reuters) - A Spanish tax amnesty aimed at boosting revenues from a recession-bound economy raised less than half its 2.5 billion euro (2 billion pounds) target for 2012, the Treasury Ministry said on Monday.

The amnesty, criticised for pardoning tax evaders with a reduced rate while the government increased income and service taxes on most taxpayers, brought in just 1.2 billion euros.

Spain has been struggling to avoid being sucked into the euro sovereign debt crisis and is widely expected to seek an international bailout eventually.

Its tax amnesty offered a reduced tax rate of 10 percent on up to five years of previously undeclared earnings for individuals who made their hidden income official.

Spanish tax revenue has fallen sharply over the last four years as companies struggle to survive and a 25 percent unemployment rate deters consumers from spending.

The amnesty formed part of a programme of tax hikes and spending cuts worth over 60 billion euros, or more than 6 percent of gross domestic product, to the end of 2014. ($1 = 0.7689 euros)

Reporting By Andres Gonzales; Writing by Paul Day; Editing by Tracy Rucinski/Ruth Pitchford