Spain’s poor affected the most among OECD nations in financial downturn | World news | theguardian.com

Protesters in Barcelona

Spain’s poor affected the most among OECD nations in financial downturn | World news | theguardian.com.

Spain‘s poorest have been hit harder than any other group in any OECD country in the years of financial crisis and downturn, according to the OECD.

While the wealthiest 10% of Spaniards saw their income fall by barely 1% between 2007 and 2010, for the poorest 10% the fall has been 14%.

Italy’s poorest fared far better, suffering a 4% drop in income, according to the report Society at a Glance 2014.

Spain’s wealthiest earn 13 times more than the poorest, compared to an OECD average of 9.4.

By comparison, in Iceland the richest have lost 12% of their income while for the poorest the figure is 8%.

The report said that in Spain “welfare is not directed at those worst hit by the crisis while social spending on the relatively well off is higher than in the majority of EU countries. Pensioners have been better protected while child poverty has risen three percentage points to 21% against an EU average of 13%.

The report followed a study by the IMF last week showing the gap between rich and poor had increased in Spain by more than in any other EU country since the crisis began in 2007.

The OECD echoed demands by the IMF and Brussels to extend VAT to products currently exempt or low rated such as food, transport and energy in order to raise revenue to help the poorest. Their argument is that, as the poorest consume the least, the increased tax burden will fall on the better off.

It also said the VAT exemptions contributed to the very high rate of VAT evasion in Spain which, at 65%, is well above the OECD average of 45%.

“Help for the long-term unemployed and poor families is urgently needed,” the report said. “This requires both legislative reform and budget resources as well as the administrative means to ensure that those eligible for help receive it when they need it.”

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