Continued from page 1

Wednesday’s increases in sales tax include a 3 percentage point hike on products and services such as clothing, cars, cigarettes and telephone services to 21 percent and a 2 percentage point increase on goods such as public transport fares, processed foods, and bar and hotel services to 10 percent. The sales tax on basic goods such as bread, medicine and books stays at 4 percent.

Other measures outlined Wednesday included:

• 660 million euros ($808.05 million) in cuts in government spending beyond the reductions already outlined in the 2012 budget.

• Wage cuts for civil servants and members of the national parliament.

• Further closures of state-owned companies.

• The scrapping of tax deductions for homeowners.

• A 30 percent cut in the number of town councilors.

• A slight reduction in unemployment pay, designed to encourage jobless people to seek work more quickly.

• A 20 percent cut in government subsidies to political parties and labor unions.

• The possible privatization of ports, railroads and airports.

In Brussels, spokesman Simon O’Connor said the European Commission, the EU’s executive arm, welcomed the government’s announcement of the new measures as “an important step to ensure that the fiscal targets for this year can be met.”

Financial markets greeted news of the measures. The interest rate on Spain‘s benchmark 10-year bond dropped 0.22 percent to 6.57 percent, away from the 7 percent levels it reached earlier this week, while the country’s IBEX stock index was up by 1.1 percent in afternoon trading.