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Spain's Rajoy says taxes will come down gradually

Spanish Prime Minister Mariano Rajoy gestures during a meeting at Villa Madama in Rome, January 27, 2014. REUTERS/Alessandro Bianchi

MADRID (Reuters) - A tax reform due to be announced in the first quarter will bring about the gradual reduction of tax rates in Spain over the coming years, Prime Minister Mariano Rajoy said in a speech on Sunday to a national convention of the ruling People's Party.

The right-wing of his conservative party has been unhappy with Rajoy's hiking VAT rates and income taxes during the first two-years of his four-year mandate as the government struggles to shrink a huge budget gap.

(Reporting by Fiona Ortiz)