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The Spanish government has increased VAT from 16% to 18% and increased the reduced rate on hotels, accommodation and restaurants from 7% to 8% on the 1^st of July 2010. This change forms part of the economic plan to help address the public finance crisis currently affecting Spain. The news has provoked mixed reactions from the business community with some claiming that the increase could do more damage than good particularly in the long term. Observers have commented however that the treasury is in desperate need of increased levels of income and that other taxes levied locally by the regional governments could also increase.