June 18, 2021

The adjustments that come, only in taxes



We finally know the fine print of the proposals that the Government has sent to Brussels and which, how could it be otherwise, include adjustments. Yes indeed, at the moment the announced adjustments affect only the pocket of citizens, not a word of possible spending cuts. Perhaps that is why “the cuts are made by the right wing.” The Government insists on saying that in Spain taxes are low compared to other European countries, but the problem in Spain is not that taxes are low, which they are not, but that little is collected and that is explained, in good measure measure, because there is a lot of tax fraud and, make no mistake, the increase in taxes will increase it. And if not, look at the figures of the underground economy in Spain and its distribution by autonomous communities. The regions with the lowest taxes are also the ones with the least tax fraud. On the contrary, the regions with more subsidies and higher taxes, have more shadow economy. Citizens do not declare their income for fear of losing their subsidies or because tax rates are so high that they compensate for the risk of fraud.

One of the measures included in the plan that has been brought to Brussels and that has unleashed the most controversy has been to put tolls on the highways. The Government has been quick to say that the figure being considered is one cent per kilometer, compared to the nine cents proposed by Seopan, the construction employer’s association. But the truth is that the measure presents great social rejection. The problem is that it is not true that road users are not paying for them. Vehicles, like houses, are the most heavily taxed properties. When they are acquired, if they are new, VAT is paid to the State and the Registration Tax to the autonomies, and if they are second-hand, the Property Transfer Tax must be paid to the corresponding community. But it is also that every year you have to pay the Traffic Tax to the town hall and every time you fill the fuel tank, half is for the Treasury. So with all these taxes administrations are supposed to be able to pay for the roads.

It also insists that they are going to harmonize the Wealth Tax, or what is the same, to implement it where it does not exist, as is the case in Madrid. And seeing this, one would believe that having a house, land or savings does not pay, but nothing could be further from the truth. When you buy a home you pay VAT or Transmission Tax, depending on whether it is new or second-hand; but in addition, every year the IBI pays the City Council and if it is not the habitual residence, it has to be included in the personal income tax return. And if you rent it, you pay for the returns you get, and if you sell it, you pay for the capital gain. What’s the point of paying Wealth Tax as well? None, only collection.

The measures included in the plan sent to Brussels have another problem, and that is that they contradict the socialist argument and podemita that they are only going to raise taxes on the rich. Most of the measures included have a full impact on low and middle incomes. This is the case of diesel taxes, all environmental taxes and, of course, highway tolls. And we will probably not get rid of tax increases because the levels of debt and deficits do not leave many options, but before asking us for this sacrifice, they should at least try to slim down the administration and this bulky Council of Ministers.

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