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Vivir en el paraíso (fiscal)
Living in (fiscal) paradise
Albert Esteves, editor of Interempresas
In order to reduce the deficit in40.000 millions, the Spanish Government, nominally chaired by Mariano Rajoy and practically by Angela Merkel, has had to raise taxes and is going to make painful adjustments (i.e.: cuts) in a few months time. Those adjustments or cuts are probably needed, but they will kill the feeble economic growth, and will negatively affect the social welfare of many, the work conditions of some and the wallet of all. Well, not really of all. There is a part of the Spanish society which lives happily on paradise. On a fiscal paradise, to be precise.
Let’s tal about fraud. It is very difficult to quantify the amount of money that should go to the treasury but, in spite of the increasing effort from the fiscal authorities, remains dark. A recent study by Pompeu Fabra University, from Barcelona, estimates that Spanish fiscal fraud amounts to 80.000 million euro.This is just twice the deficit reduction that so many sacrifices is going to cost us. Some think that this is topical, that there are baked beans everywhere. And it’s true. But it’s also true that in Spain, we bake more of them. One piece of data is enlightening: cash, which amounts to around of 5% GDP on the euro zone, amounts to twice as much in Spain. 30% of the 500 euro notes are in Spain. Something should be done to correct these excesses and reduce the underground economy to a reasonable size.
It is well known that any modern economy, even with increasingly sophisticated control systems (which they are) can tolerate a certain amount of economy invisible to fiscal authorities. Some economists are even of the opinion that black money, in adequate proportions, works like a lubrifiant for the small scale economy and, because of that, for the society as a whole. The problem is not so much of a VAT-less invoice, a bonus not on the payroll, the son of your neighbour that works for a few hours without social security, the undeclared trade of goods or services in small shops or companies. That, even if not defensible, is a cultural habit of our production system and has very limited repercussion on the Treasury.
Another thing is tax evasion, illicit capital flight, hiding to the tax authorities substantial amounts of black money being deposited in financial institutions in countries with bank secrecy. That has another dimension and should be strongly pursued. But there is yeat another one even more distinct and more profound. I mean, tax havens and its legal use by large corporations. A data point: 21 of the Ibex companies have subsidiaries in tax havens. Societies are called 'offshore' domiciled in countries whose tax for non residents is practically nil. Only in the Cayman Islands, a group of islands with only 350,000 inhabitants, there are 584 banks and 44,000 companies. The same happens in Barbados, Bermuda, the Virgin Islands... The amount of money, mostly from multinational companies, taking advantage of globalization, with impunity, and within the law, that 'optimize' their taxes, is of colossal proportions. If all the unpayed taxes were’nt, there would be no public deficit, nor economic crisis.
Tax authorities meanwhile feed on small and medium businesses, the liberal professional and the self-employed. They look very closely to the small fraud, the smallest infraction. And the new government, even reluctantly, have no choice but to keep raising rates and taxes and cutting spending and investments to reduce the public deficit at the expense of all the suffering. Oh no, not all, almost all ...
We must stop looking the other way. Small and medium employers and employees as a whole are under increasing fiscal pressure as the new global oligarchy taxes surfing paradise. The rulers can no longer ignore the blatant injustice that this entails.
We must stop looking the other way. Small and medium employers and employees as a whole are under increasing fiscal pressure as the new global oligarchy taxes surfing paradise. The rulers can no longer ignore the blatant injustice that this entails.
It estimates that the fiscal fraud in Spain rises to 80.000 million euros, just the double of the aim of reduction of deficit that so many sacrifices go us to cost
If all the money that leave of tributar the companies with headquarters in tax havens went to stop to the respective public inland revenues, neither there would be deficit neither there would be economic crisis