Friday, March 12, 2010

The Outlaw Esperanza Rides Again

There's trouble down near the Rio Bravo (formerly known as the Manzanares - we've had a wet winter in Madrid). When there's trouble in these parts folks usually look towards the Puerta del Sol, hideout of the infamous Aguirre Gang. No wonder, as it's well known for being a lawless part of town. The latest breach of the peace concerns Esperanza Aguirre's decision to launch a campaign against the increase in VAT that the government has planned to help bring down the budget deficit. Immediately challenged on what she would do with the money that would come from the tax increase, Aguirre claims that she doesn't want any of it. Maybe she doesn't need it now that the Gürtel companies are not creaming off a huge profit on every contract? She would certainly be in a far stronger position to present herself as the public defender if she hadn't already slapped a 20% increase on the price of the 10 journey public transport bonobus this year.

The PP claims that this is a legal protest, and that they are not encouraging people to refuse to pay their taxes, at least in the case of those who are not donors to the party. Now imagine for a moment what the reaction would be if such a rebellion was proposed by the Basque or Catalan governments? ABC, La Razón, El Mundo and probably the bishops too would be demanding action against separatist rebels who dare to propose their own taxation policy. It's one of the great ironies of Spanish politics in the Zapatero years that those who most loudly proclaim the idea of Spanish unity are the same as those who most frequently use their regional power to defy the national government.

The issue helps to put the focus on the fact that a large part of the public spending in Spain is no longer in national government hands, it's the regional comunidades that are responsible for much of it. All of which brings us to a fairly simple conclusion. The PP have loudly proclaimed that the solution to the crisis lies in reducing public spending rather than increasing taxes. Well the power is in their hands to lead by example in their strongholds like Valencia or Madrid. So what do you think happened when the opposition in Madrid took their PP at their word and proposed one of that party's key proposals for reducing the deficit, a reduction in the number of highly paid executive posts in Madrid's government? Did they really think that Espe had spent so many years using her powers of patronage to provide refuge for those who had lost their positions following Aznar's downfall only to start getting rid of them just because of a budget deficit? Inocentes.

Meanwhile, Spanish finance minister Elena Salgado was quoted the other day as regretting the abolition in 2008 of the impuesto de patrimonio, a wealth tax. This was done as part of Zapatero's populist "bajando impuestos es de izquierdas" policy a couple of years ago. Now the government is increasing taxes that everybody pays to help compensate for the abolition of one that was paid by very few. It gets worse, a large part of the extra take from the VAT increase goes anyway on compensation to the regional governments for the loss of the patrimonio tax. So far, Aguirre hasn't renounced the €500 million every year that she gets from the government because of that.

Such behaviour makes it clear that the PP's opposition strategy doesn't stop at just dynamiting any possibilities of a pact over the crisis, the decision to oppose the tax increases shows that they are determined to try and shut down any possible exits for the government. A recent attempt to promote a non-party confidence building exercise in the economy has swiftly come under attack from the PP, who regard any notion of shared responsibility for the crisis as an obstacle on their route back to power. The campaign was being promoted by Spanish state television and the PP threatened to withdraw their support for consensus with the government over what happens in the state broadcaster unless the publicity for this campaign was dropped. They got their way.

No comments: