The taxman cometh; five warnings

Item 1. 35 billion euros is a public spending cut from hell. The government has to raise taxes, and the rest - the speculation, the flip-flopping, the hints followed by denials - is pure circus. But then, no one really likes the fiscal element of those two oft-cited certainties of life.

Item 2. Taxes feel like punishment, and in Spain something more akin to humiliation when we read of how some public officials lead frothy, lavish lives thanks to the sweat of our brow. A government's task is to make the stick somehow resemble a carrot, rewarding certain behavior while condemning those who make wasteful choices to cough up more. The result of what tastes like a carrot should then strike a blow for the economy as a whole, or this is the theory. Tax breaks on insulation measures save energy and free up consumers' money to be spent in Spain's dominant services sector. An across-the-board VAT hike, however, stilts consumption, as was seen in Spain in the second half of 2010.

Item 3. Rajoy's PP government has already raised income tax, with the prime minister showing a Machiavellian streak in doubling back on his own words just days after closing the door of La Moncloa behind him in the middle of the Christmas vacation. He was clever enough to know that if you have to use the stick, it hurts less if the victim doesn't see it coming.

Item 4. The taxman can also enjoy a few fripperies and bits on the side. Of the more recent proposals and impositions, the euro placed by Catalonia on virtually all medical prescriptions will raise little money and a great many hackles. It gives the opposition Socialists something to campaign over and may even help keep the PP shy of an absolute majority in Andalusia, the great pre-budget contest, at the end of this month. That the government has hinted that it will tax diesel-powered vehicles more heavily is to be welcomed as a spoke in the right wheels but, on the other hand, the Madrid region's idea of charging stores and malls a levy for being situated near a Metro station had me reaching for the calendar: it can't be Holy Innocents' Day again already! A store owner knows there is a Metro station nearby. That fact is already factored into its economy, how high the rent is set, what goods will sell well, and so on. Sales and moneys from rent or real-estate values are already taxable. What activity is being levied in what we should call the Retroactive Infrastructural Benefits tax?

Item 5. One fifth of homes in Spain lie empty. Who does not know of someone who has been unable to remove an uncooperative tenant from their property, or is unwilling to even risk renting out their flat because of the horror stories doing the rounds? Such issues are far from simple to legislate but I see potential carrots and sticks on the horizon. Empty houses should be subject to a special tax, something that the Catalan and Basque authorities have looked into to prevent speculation and put housing stock to a social use. Proof is clearly a tricky beast in such cases. So the carrot better be a good one: a rental scheme, with (fair) rates guaranteed by the government and eviction easy to effect. Good jobs for the young are scarce and salaries scanty - so cheap and plentiful rental accommodation is a must in a country where the obsession with buying straitjackets so many families' economic options. When better than a crisis to bring about a change in culture?

Photograph of Finance Minister Cristóbal Montoro, by Uly Martín.

Comments

[Publicado por: Rob]

Cut 50% of all politicians at all levels, they add no value and cause chaos.

[Publicado por: Jorge]

Shouldn't the taxman be paying a visit to corporations and rich individuals who are doing more than well and still evading taxes?

I don't mind paying more and I love the idea of bringing about a change in culture, but it would be very unfair to see how, while most of us bear the effort and try to do things right, some in the top do what they want and get away with it. Yet the government doesn't seem to be serious about tax evasion and will do nothing against the big oligopolies of the energy and banking business which gives them juicy job positions and money for their campaigns. But then again, when better than a crisis to bring about a change in politics?