- This topic has 20 replies, 7 voices, and was last updated 12 years, 4 months ago by
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How long will it be before the people in Spain rise up and say they have had enough? How do the government expect their people to pay ever rising taxes and living costs when a quarter of the workforce is without employment?
Austerity means different things to different societies. I agree it’s necessary but inflicting such savage measures on a population already in severe trouble causes enormous suffering.
http://elpais.com/elpais/2012/04/27/inenglish/1335547977_874685.html
and this:-
http://elpais.com/elpais/2012/04/19/inenglish/1334862588_905658.html -
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Having an educated workforce is a primary requirement for a robust economy. Raising the fees for a university eduction is a step backwards.
If the VAT is too high, who in their right mind is not going to attempt to purchase whatever they can from other countries? And who is hurt more by this tax increase – those who are wealthy or those who are poor?
Sorry, but both of these measures are wrong in that they will not help the economy and they are immoral.
In California, each time taxes are raised on cigarettes, the percent of smokers falls (in my mind a good thing) and the number of people go to other states and load up their trunks with tax-free cigarettes goes up.
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“Having an educated workforce is a primary requirement for a robust economy. Raising the fees for a university eduction is a step backwards.”
How are you supposed to have an educated workforce if the universities do not have the funds for the right equipment/staff/etc…
“If the VAT is too high, who in their right mind is not going to attempt to purchase whatever they can from other countries? And who is hurt more by this tax increase – those who are wealthy or those who are poor?”
considering that VAT in Spain is still lower than the EU average, that should not really be an issue and if it comes from outside EU, I would assume there are import taxes, etc… But yes I agree, in a society revolving around consumption, higher VAT is not a good thing.
“Sorry, but both of these measures are wrong in that they will not help the economy and they are immoral.”
morality is subjective.
“In California, each time taxes are raised on cigarettes, the percent of smokers falls (in my mind a good thing) and the number of people go to other states and load up their trunks with tax-free cigarettes goes up.”
I can believe that. In Spain’s case the 2 cheaper locations are morocco and Gibraltar. Both have import controls in place. The 2 fellow countries that would be analogous with with the neighboring states of California are Portugal and France. Both with equal or highers prices on the products where taxes will be raised.
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I have just read on your blog the news that taxes are to rise on property purchases on the CDS. Municipalities are strapped for cash and they think it’s a great idea to use this method to raise extra funding.
Well that may look like a great paper plan in the lofty halls of municipal offices. What the practical effect will be is to depress the property market even further. We need to shift property folks so lets tax and tax again.
These municipal authorities have spent and wasted public funds as if there were no tomorrow, enjoyed the graft and kickbacks from their chums in the property business and now seek to claw some of it back from new investors.
Tell them to stick it is my response. 😈
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@logan wrote:
I have just read on your blog the news that taxes are to rise on property purchases on the CDS. Municipalities are strapped for cash and they think it’s a great idea to use this method to raise extra funding.
Well that may look like a great paper plan in the lofty halls of municipal offices. What the practical effect will be is to depress the property market even further. We need to shift property folks so lets tax and tax again.
These municipal authorities have spent and wasted public funds as if there were no tomorrow, enjoyed the graft and kickbacks from their chums in the property business and now seek to claw some of it back from new investors.
Tell them to stick it is my response. 😈
Agreed. But remember property taxes (transfer tax/VAT) is not set by the townhalls, nor do they receive the funds. Also Logan as you seem to be into ‘financial markets’, I think the government priority is to help out developers=> banks => government. Once all of this is working, the people will benefit. At least that seems to be their logic.
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Andrew taxes never benefit markets. Low tax and no tax stimulates growth not more tax.
If consumers have more to spend they generally do or save it. Either way the economy does better. Savings stimulate investment, spending increases demand across the board.Taxes produce income for governments to waste.
These politicos in Madrid and in the town halls seem incapable of understanding that know and accepted economic fact. Their concern seems only to do Berlins and the bond markets bidding and reduce fiscal spending.
It’s getting like the old days of Franco and Adolf. 😆
Maybe some of these municipals days are numbered anyway. Good riddance.
http://www.murciatoday.com/government-announces-plan-to-eliminate-small-municipalities_11494-a.html -
Low tax and no tax stimulates growth not more tax
Funnily enough I read an article this morning that contradicted this assertion
The fact that “wealth creators” do not rush to open business in Jamaica, with its 5% top personal income tax rate, or Albania, with a 10% corporate tax rate, shows that the crucial question is how a government spends its taxes, not how much it taxes.
http://www.guardian.co.uk/commentisfree/2012/apr/30/cutting-red-tape-tax-will-not-revive-britain
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That if I may say so is the classic argument of Keynesian economics so beloved by the politics of the left.
http://en.wikipedia.org/wiki/John_Maynard_Keynes.I don’t disagree with some of Keynes ideas in fact they have gone a long way to producing prosperity in the past. Now it’s a very different time. Governments are burdened with debt and investors are seeking to protect their loaned out capital and control the way governments behave.
In your quoted article the writer compares Jamaica and Albania with the wealthy industrial countries of Europe. It’s simply silly and will not stand up. That discredits most of his further arguments.
The problem European governments have at the moment is one of market credibility. If they embrace Keynes and try to borrow, tax and spend their way out of recession the market will come down on them like a ton of bricks.
Investors have had enough of governments spending their money. They have failed to produce the prosperity Keynes ideas promised because they wasted money on consumption and fueling private debt rather than investment for the future. They had their chance and blew it.
The fact is austerity and low taxes are now the only game in town as far as markets are concerned. Politicians who try anything else will be cut down to size.
Francois Hollande take note. 🙂
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@logan wrote:
The fact is austerity and low taxes are now the only game in town as far as markets are concerned. Politicians who try anything else will be cut down to size.
Francois Hollande take note. 🙂
UK tried it – and its not even really started cutting yet – and here we are in recession again.
Its now obvious its got to be a balancing act, an impossible one. -
logan is totally correct on this. I’m enjoying the bashing Keynes is getting at the moment.
The big problem is that this is such a gigantic bubble that have been built up for such a long time and when the nations around the world tries to “keynes” their way out of it just prolongs the agony. Had they not done this the crisis would have been over after around 1-2 years tops.
Bad investment needs to be brought up to the surface and auctioned off for market value. Not hide it like they have earlier done in Spain.
Here you have it. Austrian economics VS Keynes AKA Good VS Evil =). Ron Paul debates Paul Krugman a day ago. As you see Krugman can only make snide remarks and suggest that Ron Paul is a cook. Krugman a noble prize winner is scared shitless and is getting schooled by a simple politician. As you can hear Krugman and his friends only believe in the free market in the micro economy but not in the macro environment. It’s really weird that they can’t see the fallacy in that logic. As Ron Paul points out these bail outs actually only benefits the rich and it would be more honest to drop money of helicopter because that is a fairer system than bringing the hidden inflation tax on the poor.
http://www.youtube.com/watch?v=BcuAOdXD0Go&feature=youtu.be
http://blogs.telegraph.co.uk/news/nilegardiner/100153583/why-the-new-york-timess-paul-krugman-is-clueless-about-the-european-economic-crisis/ incredible that such a big newspaper is not afraid of printing this. They think Krugman is way off.
Estonia look at how they handled their crisis.
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http://www.youtube.com/watch?v=lCQ_N9wj41Q Just brilliant way of catching Krugmans stupidity.
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Francois Hollande is a fake. He attempts to appear like Chirac -speech and mannerisms. Chirac actually backs him because Sarkozy usurped him in getting the Presidency instead of his protege Dominic de Villepin. M. Hola will leave France in a mess like Jose Luis Zapatero left Spain but with much less excuse .The likelihood is the Euro will be devalued -its the least worst option and there will be inflation. Sterling will need to devalue substantially with it We are getting near to the limits of sterling appreciation as the latest UK balance of payments figures indicate.
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@logan wrote:
Andrew taxes never benefit markets. Low tax and no tax stimulates growth not more tax.
If consumers have more to spend they generally do or save it. Either way the economy does better. Savings stimulate investment, spending increases demand across the board.mmm, i instinct is to agree. But higher taxes are not necessarily to the detriment of an economy, all depends on which taxes.
Looking at mixed economies like canada, sweden, etc… they seem to promote lower corporate taxes, lower income taxes but higher consumption/property taxes. Those economies seem to be doing quite well. I think it comes down to the tax mix, not solely its level. look at the nordic model, high labour tax, lower capital tax. lower income tax rate, higher consumption tax. all seems to be (as far as i remember, anyway!) economic elasticity. -
@Fuengi wrote:
@logan wrote:
Andrew taxes never benefit markets. Low tax and no tax stimulates growth not more tax.
If consumers have more to spend they generally do or save it. Either way the economy does better. Savings stimulate investment, spending increases demand across the board.mmm, i instinct is to agree. But higher taxes are not necessarily to the detriment of an economy, all depends on which taxes.
Looking at mixed economies like canada, sweden, etc… they seem to promote lower corporate taxes, lower income taxes but higher consumption/property taxes. Those economies seem to be doing quite well. I think it comes down to the tax mix, not solely its level. look at the nordic model, high labour tax, lower capital tax. lower income tax rate, higher consumption tax. all seems to be (as far as i remember, anyway!) economic elasticity.Trust me it wreaks havoc even in those countries. The only thing that has saved Canada and Sweden is that in 90s when we had our crisis we dealt with lots of the bureacracy. We basicly liberalised our economies in many ways and the taxes that we knew would not work “pragmatically” higher taxes on corporations etc got slashed. Not because we wanted to do it but just because we knew they would leave otherwise. Normal people can’t just pick everything up and leave and that’s why you tax the people that can’t evade taxes. The problem in Greece for example was that it was quite a fair system… everyone cheated. 😆
People in Sweden for example are “stupid” and work like maniacs because they think they have a good life not understanding that it’s only because the rest of the western world is just a little bit more stupid which makes us get away with it. The mentallity is changing by the day so those generations that doesn’t “steal” from the system will soon be gone. The system will implode… just not before everyone else in europe has. You can basicly say that Germany, Sweden, Denmark and Finland are out producing everyone else and thats why their systems don’t fall apart. Sure they probably have a better functioning system but it’s just a tad bit better. Central economic planning always leads to bad results.
Higher taxes inevitable means more goverment spending which in itself means a very bad functioning economic system. Don’t get me wrong the politicians more than often have good intentions but as they say. Even the road to hell is paved with good intentions.
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I have read a report recently in a Spanish newspaper,(not on line) that Rajoy has indicated he will reverse an electoral promise not to increase IVA.
The IVA rate is expected to rise savagely from January 2013 by 4% to 22% to bring Spain into line with the rest of Europe.
This will increase living costs for an already struggling population. Utility bills will rise this year and with the IVA increase in 2013 cost hikes will continue.
I really wonder how much more the ordinary Spanish people can put up with before civil unrest begins in earnest. 🙁
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http://www.costa-news.com/content/view/9552/120/
I guess it’s just a question of the percentage increase. When governments say they will rise the actual intention is to prepare the population for the shock. Smart moves.
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