Tuesday, September 25, 2007

Only The Little People Pay Taxes

Is it really almost 2 weeks since I last wrote a critical piece on Esperanza Aguirre? I’ll have to do something about that. We got a tax cut here in Madrid yesterday, or at least we got the announcement of a tax cut. I didn’t notice any sense of general excitement in the city today following this news, but I put this down to my lack of social influence. Because those who will benefit from the announced suppression of the Impuesto sobre el Patrimonio are not a particularly substantial section of the population – only 169,000 taxpayers in Madrid had to pay anything on this tax last year. It is really a kind of wealth tax, only those who have the assets pay the tax. You don’t need to be a genius to guess that amongst the beneficiaries of the measure will be Mrs E. Aguirre of Several Large Mansions, Madrid, Spain. Let’s hope she won’t be asking for help with her heating bills this winter!

It would be comforting to think that the idea emerged from the hard right faction of the Partido Popular (PP) to which Aguirre belongs, but the truth is somewhat sadder. The idea of removing this tax was first floated recently by Tomás Gómez, the newly elected General Secretary of the PSOE in Madrid. I was impressed with the smooth transition that the PSOE had made in their leadership in the city, but I was completely unaware that we had been landed with someone so prone to Blairism. A delighted PP promptly and predictably seized on the proposal by Gómez as just the excuse they needed to lighten their tax bill.

Now Espe is a big fan of Margaret Thatcher, in an age when adulation of the Mad One is not exactly fashionable. Those of us who underwent the character building experience of living under Thatcher's rule know how things work with the reduction of taxes. You take one tax, paid by a few wealthy people, and abolish it. To compensate for the loss of this income you then raise another tax, paid equally by all people regardless of their income. It's called wealth redistribution; and we're not talking Robin Hood. So thanks a lot Tomás, you've really done Madrid a great favour.

Perhaps Gómez made his proposal because he believes Madrid to be what Lead Belly would have called a bourgeois town. Occasionally this is what it seems to be, but there is another side to the story. An interesting report almost coincided with Espe's tax gift. Despite all the talk of the vast wealth being generated in Madrid, and how it has become the economic powerhouse driving the country forward, it turns out that this is not reflected in the salaries being paid to a substantial part of the population. According to the report, prepared by the trade union Comisiones Obreras, almost 50% of the salaried workers in the region don't even qualify to be included in the famed "mileuristas" - those who earn €1000 a month. Espe doesn't think this group deserves a tax reduction, and nor - sadly - does Tomás.

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