* End of property tax breaks, 1 bln euro spending cut
* Tourism, car industry aid, education plan
* Tax breaks if small firms keep staff
* 25 bln euro credit for sustainable growth, infrastructure
* Critics say Zapatero acting too late
(Adds details, Zapatero quote)
By Raquel Castillo
MADRID, May 12 (Reuters) - Spain's prime minister on Tuesday proposed phasing out tax breaks for home buyers and boosting aid to the car and tourism sectors to fight unemployment and wean the economy off construction.
Socialist leader Jose Luis Rodriguez Zapatero unveiled his latest economic stimulus plan in Spain's State of the Nation debate as opinion polls showed government support sagging ahead of European Parliament elections in June.
His flagship proposal -- ending housing rebates which fuelled a now defunct property boom -- drew flak from opposition legislators and economists.
Zapatero's Socialists do not have a majority in Congress, and the hostile reaction from opposition parties to many of the measures, branded as too little, too late, augured poorly for their chances of becoming law.
"A modern country like Spain can never again allow so much of its resources to go towards house building, with constant price rises and serious affordability problems," Zapatero said during an hour-long speech.
The European Commission expects Spain to be the last country in the European Union to exit recession, probably in 2011, due to over-dependence on construction and credit to drive growth.
To diversify the economy and stimulate demand, Zapatero offered an extra 600 million euros to upgrade the tourism sector and a subsidy of 2,000 euros for every new car purchased.
He proposed scrapping tax breaks on mortgages in 2011, a move the government expects will encourage purchases of an estimated 1 million unsold new homes before the rebate runs out.
But BNP analyst Dominic Bryant said subsidies to buy new cars would mean little to Spain's 4 million unemployed and that the decision to end mortgage rebates was backward looking.
"Ultimately it's pretty dumb, because if he wanted to get rid of this he should have got rid of it 4 years ago, or 5 years ago and he might have tempered the housing boom," said Bryant.
TECH PUSH
In his push for a technology-driven economy, Zapatero offered 25 billion euros in credit for renewable energy and infrastructure projects and pledged a laptop computer for every secondary school student.
To stem unemployment that soared to 17.4 percent in March, Zapatero offered tax breaks to small firms that do not fire workers and a 1 billion euro cut in discretionary spending to help pay for such measures.
Zapatero called on Congress to back his proposals in an anti-crisis pact, but opposition parties scorned him.
The conservative Popular Party, which has crept ahead of the Socialists in some polls, said Zapatero failed to touch on labour, pension and justice system reforms or explain how he would pay for his spending plans.
"Recession, deficit, debt and galloping unemployment: this is the state of the nation without any makeup put on it," said PP leader Mariano Rajoy.
Zapatero's preference for short-term stimulus measures has drawn fire from business groups and Socialists outside the government who say Spain needs a deeper economic overhaul.
But deep reforms, especially to labour markets, would cast him into immediate conflict with powerful unions. (Reporting by Raquel Castillo, Jason Webb, Sarah Morris; writing by Andrew Hay; editing by Stephen Nisbet)