New Austerity Measures

[jojo]

....and more stuff from the BBC BBC News - Eurozone crisis: North versus South

Jo xxx

[Alcalaina]

Originally Posted by mrypg9

1. A commission to be set up to review Spain's ludicrously top-heavy and overlapping bureaucracy. Sixteen Parliaments with all the attendant penpushers, 'consultants', 'advisors' etc. ....expensive and inefficient. Urgent restructuring needed.

2. A small increase in tax on foreign owners of second homes that are not their principle residence.

3. Some kind of 'collar' on regional spending, over which the government has little control.

I agree totally ... but

1. They have already started on this, including a 30% cut in the number of counsellors.

2. This exists now, brought in a couple of years ago. But nobody pays it, most people don't even know about it.
Property taxes for Non-residents in Spain | Spanish Property Insight Blog

3. They have just imposed massive cuts on the regions!
UPDATE 1-Spanish regions, central govt agree deep spending cuts | Reuters

[draken]

Being half Greek I have a strong deja vu feeling. Exactly the same rhetoric was used over two years ago for roughly the same cuts... and of course I do not have to remind you in what situation Greece is at the moment. Just a pic I saw this morning on The Telegraph.



When you are in crisis budget cuts like that do not work.

[Solwriter]

Originally Posted by mrypg9

As I think that criticising without alternative feasible proposals is an armchair luxury....this is what I think should hasve been announced:

A commission to be set up to review Spain's ludicrously top-heavy and overlapping bureaucracy. Sixteen Parliaments with all the attendant penpushers, 'consultants', 'advisors' etc. ....expensive and inefficient. Urgent restructuring needed.

Although I agree, I think that any Spain Government would know that this could open a huge can of worms and a rise in nationalism, perhaps even in states which have, up til now, been quiet on this issue.
A less in your face proposal would be for national governments to restructure themselves, getting rid of jobs for the boys. and if they didn't do this, no more funding and loans from central government.

Originally Posted by mrypg9

A review of tax structure with focus on a reform of the autonomo system. The current system serves only to entrench the black economy which is itself a hige part of Spain's problem.

Reform of the autonomo system is desperately required. However, the gap between a new fairer system being set up and small businesses coming in from the black economy would leave a huge gap in taxes collected, so at this time I doubt whether a government being forced to bring in more money short term would be able to do this.

Originally Posted by mrypg9

Reform of the country's policing structures. Too much overlap and insufficient sharing of information because of separation of functions.

Agreed. But as an immigrant who does not have a full understanding of how the policing system works in Spain (apart from it is complicated with several different police carrying out different functions, but often overlapping), I cant really comment on this.
I do think, however, that any measures put in place to cut down the duties of the Guardia Civil would be met with a great deal of protest from those quarters.

Originally Posted by mrypg9

A small increase in tax on foreign owners of second homes that are not their principle residence.

Agreed. But why only foreigners?

Originally Posted by mrypg9

Some kind of 'collar' on regional spending, over which the government has little control.

Agreed. But I do not trust this Government to do that fairly across regions, and I would hazard a guess that many Spanish nationals would think the same way.

Originally Posted by mrypg9

And...which won't happen, sadly: a Commission set up to examine the pros and cons of Spain's remaining in the eurozone.

Agreed on all counts.

Originally Posted by mrypg9

The measures penalising small savers should be scrapped. They are appallingly unfair. Millionaire investors get state bailouts, the less well-off get penalised (just as in the UK) . We did all the 'right' things, saved for retirement so we wouldn't be a burden on the less well-off and have seen our savings lose a third of their value, as will those in a similar situation in Spain thanks to this disgraceful attack on the prudent.

Agreed, but as we have no savings to invest, I cannot comment further on that.

[mrypg9]

Originally Posted by Solwriter

Although I agree, I think that any Spain Government would know that this could open a huge can of worms and a rise in nationalism, perhaps even in states which have, up til now, been quiet on this issue.
A less in your face proposal would be for national governments to restructure themselves, getting rid of jobs for the boys. and if they didn't do this, no more funding and loans from central government.


Reform of the autonomo system is desperately required. However, the gap between a new fairer system being set up and small businesses coming in from the black economy would leave a huge gap in taxes collected, so at this time I doubt whether a government being forced to bring in more money short term would be able to do this.


Agreed. But as an immigrant who does not have a full understanding of how the policing system works in Spain (apart from it is complicated with several different police carrying out different functions, but often overlapping), I cant really comment on this.
I do think, however, that any measures put in place to cut down the duties of the Guardia Civil would be met with a great deal of protest from those quarters.


Agreed. But why only foreigners?


Agreed. But I do not trust this Government to do that fairly across regions, and I would hazard a guess that many Spanish nationals would think the same way.



Agreed on all counts.


Agreed, but as we have no savings to invest, I cannot comment further on that.

I really appreciate your detailed comments on my posts...It helps rethink. Thankyou.

Looking closely at the structure and spending power of regions is vital, though, and if the current Government has the will to do this, it certainly has a mandate.
Out-of-control regional spending is one of the sources of the current economic crisis...but only one. Imposing penalties would indeed be a good way to force regional governments totake a critical look at themselves.

Spain has reported a severely reduced tax take earlier this week. This is serious and it's hard to see how revenue gaps can be plugged quickly. Money is very 'moveable' these days as are wealthy individuals....something Hollande is about to discover.

Taxing Spaniards who own second homes....well, yes, I read that Spain has a very high level of second home ownership. But many of these people are already struggling with mortgages they can't afford so a further tax would push them further into debt. I would guess that most immigrant second-home owners don't fall into that category if they are non-resident.

I don't know that much about the police but I do believe that the UK model of county constabularies is a good one to follow. Why not have unified regional police forces?

As for trusting the Government...well, a majority of those who felt strongly enough to go out and vote seven months ago trusted them enough to give them a strong mandate. Policies must change as circumstances change and thanks to the fickle markets theese change on an almost hourly basis. People must be mature enough to understand that running a country isn't like playing chess..there are no fixed rules or strategies.

The savings issue is important. We are talking the 'average' saver here, not the market player. These savings are essential planning for retirement and other family needs. They also form the capital which enable others to borrow.
For many Spanish people in the middle and lower-middle bracket, this will be THE issue that affects them the most. On top of the others, it could for many be the last straw.

[NickZ]

Originally Posted by mrypg9

Taxing Spaniards who own second homes....well, yes, I read that Spain has a very high level of second home ownership. But many of these people are already struggling with mortgages they can't afford so a further tax would push them further into debt. I would guess that most immigrant second-home owners don't fall into that category if they are non-resident.


.

Long term maybe.

Short term this would only make things worse. Higher home taxes would lead to reduced prices. This would hit the banks that the government owns. So they would have that much more money to find.

[Solwriter]

Originally Posted by mrypg9

I really appreciate your detailed comments on my posts...It helps rethink. Thankyou.

You're welcome (it is clearing my head after spending the last few days writing about werewolves ).

Originally Posted by mrypg9

Looking closely at the structure and spending power of regions is vital, though, and if the current Government has the will to do this, it certainly has a mandate.
Out-of-control regional spending is one of the sources of the current economic crisis...but only one. Imposing penalties would indeed be a good way to force regional governments to take a critical look at themselves.

I absolutely agree that regional spending is a huge thorn in the side of the present Government (and the last). I was just saying that someone with diplomacy as well as vision (and awareness of issues which could arise if the wrong words are used) should take charge of this.

Originally Posted by mrypg9

Spain has reported a severely reduced tax take earlier this week. This is serious and it's hard to see how revenue gaps can be plugged quickly. Money is very 'moveable' these days as are wealthy individuals....something Hollande is about to discover.

Yes it is serious. but my argument was that the gap between bringing in a fairer system of autonomo payment and people taking it up could cause even more problems.
Perhaps changes made over a sliding scale and in fixed time periods would work better?

Originally Posted by mrypg9

Taxing Spaniards who own second homes....well, yes, I read that Spain has a very high level of second home ownership. But many of these people are already struggling with mortgages they can't afford so a further tax would push them further into debt. I would guess that most immigrant second-home owners don't fall into that category if they are non-resident.

The reason I asked "why only foreigners?" is because the Government would have to consider the housing market here, plus EU directives.

On the EU front, Spain has already been reprimanded on differences in IHT for non-residents over residents, so taxing foreign second home owners higher than residents could present a further problem for them.

On the housing market front, Spain needs new blood coming into the country and buying property, even if some of those buyers are second home owners.
Yes, Spain wants people who can pay their way and not be a burden on the state and I'm sure that younger new blood would also be preferred - more taxes to collect over a longer period and less short term risks of the immigrant being a burden on the health system.

However, Spain also has a building industry in a state of collapse and empty houses all over the country. Spanish nationals cannot afford to buy all these homes, even if they wanted to, and the only way to get building work going again is for a housing market with at least a hint of vibrancy.

As it is, those investing in a property in Spain are faced with huge obstacles, not to mention the fact that their property will likely fall in price before it gains that price back (if ever...).
If you then add what could be seen as a discriminatory tax onto the cost of buying a property in Spain, what good would this do long term to the housing market?
As we tell people coming to this forum, there are plenty of other countries they could consider instead.

Originally Posted by mrypg9

I don't know that much about the police but I do believe that the UK model of county constabularies is a good one to follow. Why not have unified regional police forces?

The problem is that the UK system appears to be pushed to the limit, with volunteers being used to police many areas, particularly in the cities.
The UK police force is also split more than people realise - security police for one thing are members of the police, but do not have the same rights. Then there are the disparate forces concerned with particular types of crime.
But yes, in principal a unified force appears to be a better idea.

Originally Posted by mrypg9

As for trusting the Government...well, a majority of those who felt strongly enough to go out and vote seven months ago trusted them enough to give them a strong mandate. Policies must change as circumstances change and thanks to the fickle markets these change on an almost hourly basis. People must be mature enough to understand that running a country isn't like playing chess..there are no fixed rules or strategies.

But we know that just because someone votes for a particular political party that does not mean they trust them. It is usually a choice of the lesser of several evils.
And we also know that voters can be fickle, just like the markets.
Rajoy does have time to bring in policies which will alienate many of those who voted for him and may even get away with it the next General Election, but this does not mean that the path he chooses will be an easy one.

Originally Posted by mrypg9

The savings issue is important. We are talking the 'average' saver here, not the market player. These savings are essential planning for retirement and other family needs. They also form the capital which enable others to borrow.
For many Spanish people in the middle and lower-middle bracket, this will be THE issue that affects them the most. On top of the others, it could for many be the last straw.

Yes I do agree, it is just that I know little about savings, not having the luck (some would say foresight) to have any.
And I do agree that those in the middle and lower-middle bracket are vital to consider.
Not wanting to harp on about history, but it is often from these groups that the extreme right wing arises (or at least, causes the most trouble).

[thrax]

Whoa Solwriter, your head might now be fixed not writing about werewolves but my head is now hurting because I am having to think about everything you and Mary have said. For me, in a nutshell, austerity measures simply won't work. A government needs income from taxes; austerity measures drive up unemployment and will close down businesses thus less income from tax. Mary will tell me what form of economic theory my views are based on (I have no idea) but for me an economy must be invigorated not starved to create more jobs. The creation of jobs is surely at the heart of any society??

[jojo]

Originally Posted by thrax

Whoa Solwriter, your head might now be fixed not writing about werewolves but my head is now hurting because I am having to think about everything you and Mary have said. For me, in a nutshell, austerity measures simply won't work. A government needs income from taxes; austerity measures drive up unemployment and will close down businesses thus less income from tax. Mary will tell me what form of economic theory my views are based on (I have no idea) but for me an economy must be invigorated not starved to create more jobs. The creation of jobs is surely at the heart of any society??

Its all too much for me too Thrax lol!! I think Spain should concentrate on getting its tax evasion issues sorted rather than simply piling more tax onto the population, which to mind will just encourage even more tax evasion and "black" money! I still think they could get away with just upping the tax on ciggies and booze lol!!!!

Jo xxx

[Alcalaina]

The Spanish government (and all others in the eurozone) signed away their right to determine their own budgets last year. There are now only two options for any country in financial difficulties; make the required cuts and watch the nation's life-blood go down the drain, or leave the EU.

The IMF, who are behind the drive for austerity, are urging the rest of the world to invest in growth in Europe. The way to do this, they believe, is by easier credit, lowering wages and reducing workers' rights - effectively making it as cheap and easy to produce goods in southern Europe as it is in the developing world.