Right-wing prime minister Mariano Rajoy has unveiled the biggest attack on Spain’s welfare state in history in a move described by radical opposition MPs pouring  ’gasoline onto the streets’.

The measures include a swathe of new taxes and spending cuts designed to reduce the budget deficit by 65 billion euros by 2014 in line with EU demands linked to a deal that provides a 100 billion euro handout to the country’s banks.

Rajoy, who pretty much admitted to MPs that he’d  ditched all the campaign promises that got him elected last November, proposed a 3-point rise in the main rate of the regressive Value Added Tax on goods and services to 21%, and outlined cuts in unemployment benefit and civil service pay and benefits.

Amid  jeers and boos from the opposition,  he also announced new indirect taxes on energy, plans to privatise ports, airports and rail assets, and a reversal of property tax breaks that his party had restored last December. Cuts to city hall governments, closures of public companies and cuts to time off for public sector workers for trade union duties were among the long list of measures adding misery to the general populace.

As the right-wing leader unveiled his fresh attack on welfare and workers, hundreds of coal miners marched through the centre of the capital to protest against a previous 60% reduction in coal subsidies that will force pit closures, leave them jobless and their communities devastated.

Miners’ protest in Madrid

The miners, who had walked some 400 km (250 miles) from the Asturias region over 44 days, were joined by thousands of supporters, including trade unionists, on Wednesday after receiving a hero’s welcome in Madrid on Tuesday night as they marched in with lamps lit on their helmets.

Public anger over spending cuts has escalated as school and hospital budgets have been savaged. ‘Without the mines we don’t have anything, absolutely nothing in our region,’ said one of the miners in the protest, Albano Gonsalvez.

Despite nearly a quarter of the workforce and more than half of Spanish youth on the dole queues, the government said unemployment benefit would fall to 50% of previous earnings from 60% after the first six months on the dole.

In short, Rajoy, who started his administration with tax and cuts measures that deepened the recession and the pain felt by the majority of Spaniards, has now added some more – in spades.

Contradictory Rajoy

United Left leader Cayo Lara warned that the cuts were ‘gasoline to the streets’.

Sporting, along with his parliamentary colleagues, a black top in solidarity with the miners, Lara said Rajoy’s policies were a  ‘sea of contradictions’.  He reminded the Popular Party leader of the scathing attack he had made on former Socialist prime minister José Luis Rodríguez Zapatero when he had increased the sales tax as part of a series of austerity packages that have turned Spain’s economic and public finance mess into a veritable catastrophe. Similarly, Rajoy, the then opposition leader had  attacked the socialist administration’s cuts to the wages of public sector workers.

Turning his fire on the finance minister Cristobal Montoro, Lara said it was ‘grotesque’ that the finance minister could be justifying tax hikes while there were so many wealthy individuals and corporations who paid little or not  tax at all, something that had been encouraged by the government’s ‘unseemly and unfair tax amnesty’ that was passed in April.

And he renewed calls for a progressive tax reform, to raise corporate taxes and for the government to back a Robin Hood style tax on financial transactions.

Lara slammed a fresh round of cuts to wages through the elimination of the Christmas ‘bonus’. And he said the attack on time available to trade union reps to support workers was another ‘gift’ to employers after labour reforms, passed in May, that made it easier and cheaper to fire workers.

‘Kid gloves for the strong and an iron fist for the weak’

Once again, argued Lara, the government’s approach was ‘kid gloves for the strong and an iron fist for the weak’.

Lara also tackled the most sensitive issue of all – the scandalous bailout of Spain’s banks whose out-of-control speculation on the housing market sparked the country’s fall into disgrace. A first, 30 billion euros tranche of a 100 billion euro banking welfare cheque has just been agreed with EU leaders, but strings are attached.

Despite claims by Rajoy otherwise, Lara said the bail out deal had ‘stripped’ the country of its sovereignty and democracy as the EU was now imposing ‘strict conditions’ and a ‘full-scale intervention’ in the government’s key economic and budgetary decisions.

Fresh protests planned

Trade union centrals Comisiones Obreras and UGT say the Government measures will generate ‘more unemployment and economic recession.’ They have called a joint day of protest on 19 July.