Basic foodstuffs, such as bread, milk, eggs, fruit and vegetables will not cost any more, as the “Impuesto Sobre Valor Añadido” - Value Added Tax – remains the same at four per cent. Consumers of alcoholic drinks and tobacco products will notice a rise of two per cent, as they are classed as luxury items, and the tax increases from 16 per cent to 18 per cent, as it will for clothing and footwear. Most local hypermarkets and supermarkets have expressed their intention of not passing on this increase to the public “at the moment”. However, other products considered by the Government as “essential”, for example pharmaceuticals, education material, and council housing, will not increase, ensuring that Spain still has one of lowest levels of taxation in Europe.

Fuel will also be affected with a two per cent increase, pushing the price to near record levels following the rise of almost eight per cent on petrol and over eleven per cent on diesel so far this year. The price of bottled butane gas also rose as from 1st July by 55 cents, and the traditional orange bottle now costs €12.23. The price of bus tickets has also risen, with the application of the higher VAT level, which this year coincided with the annual price revue. As far as the Ibiza Sun has been able to ascertain, most of the bus lines on the island are holding their prices, although the route from San Antonio to Ibiza has risen by 10 cents to €1.85.

Buying a new property will also prove more expensive with an increase of one per cent on the level of VAT, (from seven per cent to eight per cent), which will add an additional €2,000 to the average house price.

Finance experts warned the hike in rates would mainly affect the 26 million Spaniards with incomes of less than €30,000 per year, which makes up around 88.76 per cent of the taxpaying public.

The General Secretary of Gestha, Jose Maria Mollinedo, claimed "The tax will hurt the shopping basket of the majority of Spanish citizens because they spend their income for consumption and don't save, which is not subjected to VAT." He continued that the increases were “regressive” and would effect the poorest members of the population. In addition, Mollinedo considered that the increase in VAT is "regressive" because it will affect the groups with lower purchasing power, such as the 18.4 million pensioners and 'mileuristas', which represent 63 per cent of Spanish citizens .

Spain is the second country in the Eurozone, behind Greece, which earns the least in tax returns. In 2009, for every €100 households allocated to private consumption, the Inland Revenue collected only €6.40.