There are many ways to introduce economic issues into electoral campaigns if you want to sour the debate for the government in power, in this case that of President Pedro Sánchez. But since the economy is holding up – employment is growing, companies are obtaining historic profits while the social protection network has been expanded – fat salt or alarmist discourse is of no use and we must refine it more, find a special angle that brings a high sensitivity among certain social sectors. And sometimes reality is twisted a little and pure ideology is used.
It all started with a report from the Juan de Mariana Institute that stated that Spanish workers pay more than 50% of their salary in taxes. The calculation included personal income tax, the company’s and employee’s contribution to Social Security, VAT and even municipal IBI, among other taxes. From there the noise increased until the president of the CEOE employers’ association, Antonio Garamendi, propelled it into the stratosphere by proposing that workers have all the money, the gross amount, deposited into their accounts, an idea that startled many businessmen who do not share it.
Afterwards, each one individually would be in charge of transferring the different items: personal income tax to the Treasury and social contributions for unemployment and the future pension to Social Security. In this way, the affected person would discover that between what his employment costs and what he finally has left there is an offensive difference. An incitement to fiscal anger that would open the door to demanding reductions in all items. The fiscal chaos. And the entry point to the so-called “freedom to choose”, which would condemn the most desperate to spend immediately, make ends meet and denigrate the rest. The social explosion that is incubating Javier Milei’s Argentina may put an end to these debates.
To propose, the aliquot part of other items that are paid with personal income tax could also be received, such as those destined for subsidies to employers’ associations, with which some of them pay their presidents; the advantages for certain returns on capital; public services; security or defense expenses… and so on ad infinitum.
It is shocking that an employer president does not distinguish between taxes and contributions and puts everything in the same bag. Contributing to the pension system, that is, ensuring the income of those who have stopped working but have contributed, is not a tax. Nor are contributions to private funds, which the employers defend when the government in power tightens its taxation.
The fact that millions of people in Spain are regularly collecting their pension denies without a doubt that these contributions are being kept by the State. This acts as guarantor of its collection and distribution, but does not use them to finance its functions as a public administration.
But beyond the anecdotes, there is a deep sea in the matter of taxes. In Spain and in the world. Demonizing taxes is a global trend in which the classic right and the new populisms coincide, from Donald Trump to Giorgia Meloni, including Alberto Núñez Feijóo and Emmanuel Macron. Taxation is the great enemy. Paradoxically, this preaching grows despite growing inequality, which concentrates more wealth in the hands of the wealthiest and taxes serve to alleviate its worst effects.
It is one more element of the growing global polarization. Contrary to the devaluation of the usual labels, right and left, the position on taxes says much more than any other about the position on the political and social spectrum.
In Spain the debate is very intense, as in the US and France, each with specific points. The local Spanish contribution comes from the fact that the PP claims to have invented a specific local model of success that can be extrapolated to the entire territory. And he takes it out for a walk in every election campaign.
This is Madrid, the tax haven for the unburdened. First, singular phenomenon; then spread like an oil spill over other communities in which the Government has achieved. An invention that serves both to defend fiscal anorexia and to pillory regional governments that are forced to raise taxes because the financing system does not cover their expenses. It excites the bad mood of the taxpayers/voters of the political rival. And the comparative grievance, everyone wants to stop paying.
This model is the lever of Isabel Díaz Ayuso and the disturbing shadow it casts on the stability of Núñez Feijóo. She, unlike the rest of the politicians, lives outside the criticism of the elites who benefit from her measures, despite the tremendous political occurrences that define her so well. Although we must be attentive to the erosion of it caused by the tax crimes of her boyfriend.
The negative impact of Madrid’s licentious tax measures on other communities and on the entire collection was already known. The contribution that was not collected by the source, due to the taxpayer’s departure to Madrid, was hopelessly lost because the taxpayer was not going to pay at destination. He migrated just for that.
Now, with the new twist of the PP communities that follow in Madrid’s wake, the effect is multiplied. They approve of losing income, cutting taxes, to claim them from the State. This, in turn, will end up looking for ways to increase its tax revenues. Tax increases that the rest of the Spaniards will pay; without eating or drinking it.
At this point there is no doubt that the Spanish tax system lives out of its time and needs a fairly extensive readjustment. But Milei-like dreams of a world without taxes, or minimum taxes, are a sure recipe for social disintegration. As can already be seen in the quality of many basic services: Health and education in the lead.
