A few months ago, everyone took it for granted that the PSOE would not dare to carry out a complete fiscal reform in this legislature, much less in the last year. Raising taxes is something that governments usually only do if they are forced by the economic situation. It does not sell very well, because a majority of voters already believe that it pays too much, which does not prevent it from thinking that the State should increase public spending.
The question ‘where would the money come from’ is considered rude. If you do it to an opposition politician, he looks at you strangely and tells you that there is certainly room to get it with some cuts while he gives you examples that would not raise more than change.
María Jesús Montero gave the surprise on Wednesday in Congress. To questions of the journalists, the minister of Property mentioned until in three occasions the words ‘great fortunes’. “We have done it with energy companies, we have done it with banking and we have to continue exploring it with large fortunes as well,” she said. Exploring is not synonymous with approving, but it is more than just wincing if asked about it.
There are few things worse in politics than creating expectations that are then not met. Montero has raised the bar on an issue in which United We Can has been calling for more ambitious measures for some time. There was a time – not long ago, in June – when the Socialists’ partner demanded a special tax on electricity companies and the PSOE was not very convinced. Until the tax became a reality and came to be intensely defended by Pedro Sánchez. One has to wonder if the same can happen with the tax increase for the highest incomes.
Faced with the argument that those who have more pay more, the Popular Party also believes it has a winning trick: that everyone pay less. Does the price of electricity go up? Less taxes. Is the price of food going up? Less taxes. How then would public services be financed? Less taxes, because more will be collected by lowering the tax pressure.
The British Prime Minister, Liz Truss, sells the tax cut as a miracle cure, as does the PP in Spain. Optimism or delusion? Kenneth Clarkeformer Minister of Finance and conservative deputy for 49 years, has clear ideas on the matter.
“The simplistic idea that tax cuts will automatically produce growth is nonsense,” said Clarke. “Everyone would if that worked. There is a slight touch of the style of the Argentine and Venezuelan governments in it. This is not the time for tax cuts because we have incurred huge public spending, which I supported, to ward off the worst effects of Covid, leading to huge public debt. The tax cuts will stimulate growth in demand, but the problems lie in the difficulties that exist in the supply, so they will put upward pressure on inflation.
It has its irony that a veteran tory say that the festival of low taxes to which the right has signed up smells like a Bolivarian or populist remedy. Maximum gratification in exchange for minimum effort.
Liz Truss argues that the tax cuts will pay for themselves, and that large government aid to people coping with rising energy prices will be financed with more debt. The Institute of Fiscal Studies – an independent think tank cited by everyone in the United Kingdom – states in a report that Truss’s idea “that the tax cuts will offer a boost sustained growth is, at most, a gamble”. The money that the State will have to borrow will reach 100,000 million pounds, more than double the official forecasts made in March in the presentation of the last budget.
The PP has got down to work wherever it governs, such as Andalusia. The objective is the Wealth Tax. According to the 2020 data for all of Spain, the latest from the Tax Agency, they paid it 189,613 taxpayers –0.4%– with an average equity of 3.5 million euros. Those who are usually called the rich. They did not stop being after paying: the average fee was 6,348 euros. The total collection, 1,200 million.
In these times of soaring inflation and record-breaking energy prices, how can we not worry about people who enjoy a net worth of 3.5 million?
The Andalusian Government has resolutely taken the path that Isabel Díaz Ayuso and the PP of Madrid opened. The tax race between communities has opened without anyone disguising. Ayuso did not do it and neither does Juanma Moreno. The Andalusian president came to state openly that his objective is Steal taxpayers to other regions: “I tell Catalan businessmen that their land is here”. Then the PP is surprised to have lost so many votes in Catalonia.
Moreno went to Madrid to present the abolition of the tax. He couldn’t do it in Seville. There are days when it seems that some PP leaders have not ruled out the hypothesis that Alberto Núñez Feijóo will lose the next elections. In the event that Feijóo thinks that the joke of leaving Galicia has been very expensive for him, we already know that Moreno will not allow Díaz Ayuso to be thought to be the natural heir.
Those regions of Madrid and Andalusia governed by the PP hold the last positions in public health spending per capita. That is the argument that the left has at hand. Mónica García, from Más Madrid, recalled that these tax cuts benefit those who have the most, not everyone: “You will increase the days you wait to see the doctor and the ratio in the classrooms.”
When a government sees its financial needs met, it is legitimate for it to think that it may not need to extract more resources from taxpayers. The problem is that those same generous autonomous communities do not stop complaining that the autonomous financing model does not provide them with the necessary funds. The same, if there is some kind of economic emergency, of which there have been several in the last two years. They want others to finance their fiscal promises.
This same Andalusian Government, which has some taxes left over, has requested extraordinary aid this week with the aim of mitigate drought damage. That money can come from Brussels or Spain, but apparently it is not worth what it has in its own funds. It is one example among many of how the communities have become accustomed to saying that if things go well, it is thanks to them, and if they go badly, it is Madrid’s fault. And they are not thinking of Ayuso, but of the central government.
The August CIS survey offers some pearls on taxes that have already appeared in surveys from previous years. People are asked if they think the necessary funds are dedicated to a series of public services. 71.7% say that few are used in health; 57.1%, in education; 66.3%, in housing; 55.2%, in pensions and 85.2%, in science. Several of these items are gigantic in the Budgets.
Where does the money have to come from? Only 9% affirm that Spaniards pay few taxes (41% say that there are many and 46.5% that they are “regular”, that is, they are not clear). 55.7% think that society benefits little or not at all from taxes. They should be asked how they think those public services that they think should have more money are financed. Those hospitals have not been financed with Monopoly money.
The balance of that survey is a bit confusing, because in the end it is difficult for everyone and in all countries to pay taxes. Or he believes that by scratching a few euros from items that he is not interested in, and they are usually very few, he will be able to finance the departments that require huge amounts, such as health, education and pensions.
The parties that make clear and crystal clear to public opinion where the priority is (paying less taxes or having better public services) will enjoy a certain advantage in this debate, especially when the electoral campaign approaches. Optimism is not guaranteed. Let’s not rule out that in some autonomies some opt for ‘every man for himself’ and that they even do well at the polls.
Add Comment