Money | Mariano Rajoy Spain Rolls Out Painful New Austerity Measures Taxes raised, benefits cut By Evann Gastaldo Posted Jul 11, 2012 8:55 AM CDT Copied Spain's Prime Minister Mariano Rajoy speaks during a control session at the Spanish Parliament, in Madrid, Spain, Wednesday, July 11, 2012. (AP Photo/Andres Kudacki) Spanish Prime Minister Mariano Rajoy today announced tough new austerity measures that will reduce the country's budget deficit by $80 billion over the next two and a half years. Spain has been having a tough time meeting agreed-upon deficit targets, the New York Times reports, but yesterday eurozone finance ministers eased this year's target to 6.3% of GDP. The new austerity measures include an increase in the value-added tax from 18% to 21%, which Rajoy had previously opposed. "I know these are not pleasant measures, but they are necessary. The circumstances have changed and I have to adapt," Rajoy said. "Growing and creating jobs isn’t possible today. The outlook is truly somber." Jobless benefits and state employee pay were also cut, the Wall Street Journal notes, and local government reforms are also expected to save billions. Next year's deficit target is 4.5%, while 2014's is 2.8%. Read These Next 11 people hurt in a "brutal act of violence" in Michigan. We knew Letterman would pipe up about Colbert eventually. A parent's nightmare, in a white cardboard box. Now we know why Ghislaine Maxwell may have opened up to the DOJ. Report an error