A sign reading “We assume the VAT tax rate increase. We step on the VAT tax rate” at a shoe store in Madrid, yesterday. Spain raised its VAT rate to 21 per cent on a range of goods and services as part of a Government plan to boost revenues and cut the deficit and avoid a full-blown European bailout. Cash-strapped Spanish consumers and small business owners adjust to a higher value-added tax imposed to cut the public deficit while the country’s second recession in three years drags on.

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