By Raymundo Larraín Nesbitt
Lawyer - abogado
21st of November 2020
Spain is the only country in Europe - and I’d add in the whole world - to raise taxes in 2021, in the midst of a financial depression triggered by a global pandemic. Fun fact, on a completely unrelated note, did you know that Spain also happens to be the only country in Europe run by a Communist government?
Although officially Spain is ruled by a hard-left wing coalition of moderate centre-left Socialists (PSOE) and Communists (PODEMOS), it is now apparent to all that the Communist element has taken over and is under complete control over its moderate partner to the point they are calling all the shots. The social-communist government has approved a batch of clearly unconstitutional laws that clash directly against fundamental rights enshrined by Spain's Constitution of 1978: assault on the judiciary, new Gag law to repress criticisms against the government's gross (mis)handling of the pandemic, creation of a new 'Ministry of Truth' to quash dissension in social media & written press, central planning of property rentals, tax office's new power to kick down doors without a judge's order, Ley de Memoria Histórica is a coarse attempt to subvert and rewrite Spanish history opening old wounds, it stokes dissension, polarizes society, and punishes all those that may think differently from what a hard-left wing government establishes is the 'right' way to think, Ley Celaá (a nefarious 'education' law which purpose is to pursue the ideologic indoctrination of young generations on eliminating Spanish as the official language in several regions of Spain as a political concession to separatist groups in exchange for their political support to approve the annual budget law. It also allows students to pass with one or more failed subjects (!), it also attempts to eliminate semi-private education (read religious), eliminate schools that have special tuition for pupils with special needs & care as they suffer from a physical and/or mental disability etc etc etc), etc.
Spain’s long-awaited new budget law was announced with much fanfare early on this month, and our beloved Communist leader even wore a suit for what seems like the first time to mark the occassion. The new budget law will be passed with the political support of nationalists (read separatists), communists, and pseudo terrorists (BILDU, political heirs of Basque separatist terrorist group ETA which murdered in cold blood over 800 people, including 20 children, is akin to our IRA. They are also communists btw). Separatists, communists and pseudo terrorists, these are the political partners Mr. Pedro Sanchez has chosen. Lovely bunch y’all.
This tax increase has now been included in the new budget law for 2021. Spain’s Communists had long desired to practice a drastic tax rise that would afflict us all. They had included it in their political agenda for all to see. Early in May this year the Communists announced an unprecedented tax hike of 85 billion euros they intended to reap from taxpayers!
In view of this crazy proposal, I call a spade a spade, I wrote a harsh piece which I published in June 2020. In this article, I criticized this measure as it would saddle the middle class and SMEs at a time in which the Covid-19 was starting to cause financial mayhem. I even ventured that we could end up like Argentina if we continued down the dark path set by our beloved communist leaders.
Fast-forward six months, and our beloved Communist government has done next to nothing to save millions of jobs and thousands of SMEs who are withstanding the brunt of the ongoing onslaught brought upon us by the vile virus. Over 100,000 companies have gone under in these six months, millions of jobless, and most importantly, over 70,000 lives have been lost (our Communist government officially only acknowledges 29,000 deaths).
Spain, as I wrote over six months ago, is facing the most challenging financial situation over the last 84 years, since the outbreak of the fratricidal Spanish Civil War in 1936. Unfortunately, albeit unsurprisingly, our politicians have failed to rise to the occasion (yet again) marred by petty power squabbles of their own while the whole country languishes in despair.
Fortunately for us punters, the Union, our good-hearted Brussel's Overlords, pulled the leash on our Communist leaders to ‘soften’, and even postpone, the blow of a much-vaunted tax hike. Officially the tax rise will now ‘only’ affect high-earners and large multi-billion corporations. Looks great on paper, but when more qualified minds than my own have run the numbers, they have concluded that this is in fact false. In truth, over 84% of the tax rise will be borne by Spain’s ailing middle class and SME’s, just as I feared back in June and as I wrote in my article at the time bringing us an inch closer to Argentina.
Amongst these qualified experts are no less than the Governor of the Bank of Spain, who came out, in a refreshing demonstration of independence to which we are unaccustomed, to say the new budget law and planned tax rise would greatly affect Spain’s middle class and SMEs proving counterproductive (understatement of the century). The IMF also publicly declared what a bad idea it was to raise taxes given the challenging financial context we were in. Several other high-profile experts have since followed suit voicing their discontent at these ill-thought measures that will greatly prolong the pain and push back financial recovery in Spain by several years. Moreover, I’ve read several experts half-jokingly writing that if a country wants to exit the depression, they should adopt the opposite measures the Spanish government is taking. Frankly, I don’t find it funny at all.
But the most dangerous and reckless thing our beloved communist government has done to date in my humble opinion has gone largely unnoticed; it is to eliminate caps on overindebting itself. In effect, Spain has eliminated all limits allowing itself to overborrow, which is foolish and constitutes a prime recipe for a future bankruptcy on not exercising the due discipline and control over its public expenditure. Spain's debt is increasing at a whopping exponential rate of over 630 million euros/day! Last tax quarter we were sitting at 99% of national debt by rapport to our GDP, on Q3 2020 we have jumped to 110% of our GDP! This trend, long term, is simply untenable and may lead us to default. If we continue with this merry trend unabated we are sitting on a time bomb. Spain lacks the financial clout of Japan or the US, we cannot possibly afford such high figures of debt least we default. Our national credit-rating as a result will suffer (read interests to borrow will soar mid to long term) in view of the political instability & uncertainty our beloved politicians are causing making borrowing money more onerous on the long run and edging us closer to the brink. By far, the most dangerous measure, bar none.
Words fail me. I just cannot begin to describe how very stupid it is to raise taxes in the midst of a financial depression; make no mistake, this is no ordinary recession. You only need to walk around any high street in Spain to see half of the businesses have shut down or are boarded up. Whilst other countries in Europe are literally bending over backwards to assist, or even rescue, companies and self-employed in a bid to preserve jobs, Spain has done next to nothing in all this time when it comes to tax breaks, government subsidies or any kind of grants to those in need. Our government seems totally detached from reality and devoid of any sense of urgency on acting swiftly and decisively before we lose even more jobs and companies (mostly SMEs). In my article of last June I wrote that what would be logical, given the grim financial context induced by the virus, would be to lower taxes or even give grants to companies and individuals allowing them some breathing room until things got back to normal. All other EU countries have adopted similar measures in this direction over the last six months, except Spain. Spain hasn't even been able to reduce the VAT on face masks from 21% to 4% as other EU countries did months ago despite it becoming a prime necessity for society and those collectives in need. Only recently, as in last week, has it done so buckling under the huge pressure piled against it by society. Even so, they have lowered VAT only on surgical face masks, which 90% of the population does not use. It is beyond belief that our president, who happens to hold a PhD in Economics no less, would agree to such a daft measure as raising taxes in the middle of a financial depression. You couldn't make it up.
But I don’t want to end this blog post on a negative note, God forbid.
As a silver lining, while the whole country struggles to cope on by, Spanish politicians have nonchalantly self-approved yet another generous pay rise of 2% (yay); this will be the fourth, or fifth, since they are in office (sorry, I lose count). This is great, they can now spend the surplus propping up our ailing economy. Stupid me, I would have reduced, or at the very least, frozen my public wage as a politician would I be in power in solidarity with all that is going on in a country primed to be rescued with EU funds in the near future. But hey, that’s just me. Clearly, I don’t have what it takes to be a career politician. God bless’em all.
“The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.” – Winston Churchill
Sir Winston Leonard Spencer-Churchill (1874 – 1965). Born into a privileged aristocratic family, he was an eminent British career officer, artist, historian, delicious eccentric, and laureate writer – awarded the Nobel Prize in Literature in 1953 “for his mastery of historical and biographical description as well as for brilliant oratory in defending exalted human values.” With dogged single-minded determination, he defied alone and managed to stave off, the tyrannical Nazi wave in WWII, unwaveringly assisted by our American cousins, which threatened to swallow whole the United Kingdom as it had already overrun most of Europe. He resolutely led the country out of its darkest hour, restored Europe’s freedom, and laid the groundwork for peace and prosperity which all future generations have come to enjoy since and taken for granted, or so it would seem. As a keen-eyed historian, in line with fellow Founding Fathers Schuman and Monnet, he was quick to grasp and understand the importance of a united Europe to avoid repeat past mistakes which had resulted in two world wars that ravaged the continent. Consequently, he became a staunch defender of the idea of creating a single supranational political and economic entity which reconciled old foes and would act as a guarantor of peace & prosperity in the continent (in his own words, a “United States of Europe”); in time, this European fellowship would be known to us as the European Union. Churchill was instrumental, and the key driving force, behind the creation of the Council of Europe, a forerunner of what is now the European Union. He is credited as one of eleven Founding Fathers of the Union. Churchill incarnated like no other the best of British values. A child of the House of Commons, he was a proud servant of the State, never its master. A true statesman that would always put ahead of any consideration the best interests of our people, by tearing down divisive walls and fostering at every opportunity union.
Simply put, he’s likely the finest British politician statesman ever to grace 10 Downing Street.
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Spanish Government to Raise Taxes – 8th June 2020
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