We all contribute to sustaining public spending according to our economic capacity, with “a fair tax system inspired by the principles of equality and progressivity.” That's what the Constitution says. In practice, things are different: high incomes and large companies start with an advantage and access to tax planning and engineering resources that reduce their bill.
This is stated by the technicians of the Ministry of Finance José M. Mollinedo and Carlos Cruzado in The rich do not pay personal income tax (Capitán Swing, 2024). With an inspection focused on the average taxpayer, lack of resources and after failed solutions such as tax amnesties, they denounce that the system neither reduces inequalities nor corrects deficiencies. With all this, the regional race to lower taxes is not appropriate.
The tax system is imperfect.
It has had many specific reforms over time with which it has lost a certain coherence and unity. The Constitution defines a tax system by which we must all contribute to the maintenance of public burdens with a fair tax model. But there are many cases where taxes are not paid. People with large incomes and assets who fail to comply with their tax obligations, who hide parts of those millionaire assets and assets through companies in tax havens. A common denominator in the Panama Papers, the Falciani list, Football Leaks... They have a lot of income, but they don't pay taxes.
The rich benefit.
Despite the measures that are being taken at the international level to avoid this, they have traditionally been avoiding taxation of part of their income. Also through avoidance measures (minimizing payment while complying with the regulations) due to a tax rule that is not fair. Justice implies a certain equity in the payment of the tax, but this does not occur because in the norm there are anomalous, anachronistic, strange circumstances.
And they squeeze them. Isn't it necessary to hide so much to avoid the treasury?
That's what we're seeing, unfortunately. There are many regulations that should be corrected, but the conclusions of the experts consulted by the Government have not been applied, as in 2014, 2017 or 2021. There are important benefits that these people have that not many citizens have. One is to have large banks and specialized offices, including international consulting. It gives them information that the rest of the citizens do not have and we are seeing this, for example, in how large companies use the main advantages of the Corporate Tax law. Their tax rate, their real rate on the profit they account for, does not reach 6%. In medium and small companies it is 14%. Its real rate is higher, double. It does not seem very logical that in a linear tax with a general rate there are large companies that pay half as much as small ones, which even have a more beneficial special regime.
“The Tax Agency prioritizes checks on individuals, the self-employed and SMEs, to which it dedicates 80% of its staff,” they point out. This makes sense?
The bulk of the verifications arise from the control of discrepancies between the data declared by each taxpayer and the information held by the Treasury. People and entities that have good advice do not incur discrepancies and therefore do not usually enter the verification plan. Unless some information arises such as journalistic leaks... Or because there is an entity that declares payments that another does not collect... Or because it says that it resides in another country when it really resides here... That does make large fortunes the subject of verifications .
If the current model increasingly focuses on worker income, does it harm the average taxpayer more?
Tax control of people is simpler for the Tax Agency. They do not have such good advice or they do not have it and in the end it is a crude fraud, which is very easy to be discovered. It is a job that is done very quickly. But fraud in income tax returns does not usually exceed 1,000 euros. If we look at the past, a single cement multinational was fined 400 million euros. How many small taxpayers, with small amounts, do we have to investigate to add those 400 million? There may be room for improvement there. The focus of the inspection would have to be changed. Of course, investigating a multinational is infinitely more complex than that of an ordinary citizen, but if we were able to change our vision we would arrive at a more complex, more sophisticated fraud. It may be slower, but perform much more.
They are very critical of the result of the tax amnesties. Did they fail?
In history we have seen that they have always been bad decisions with a significant political cost in most cases. Of the amnesties that have been produced, none have achieved the objective of a clean slate. This clean slate has only occurred to erase cases that were being investigated or about to be investigated, to take advantage of it and not involve crimes against the Treasury. As in the case of the Pujol family.
Athletes, celebrities, artists... They disappoint and continue to be idolized.
It shows the lack of fiscal awareness we have in our country. When Leo Messi went to court to testify about his investigation for tax crimes, people chanted him. We do not believe that it is very acceptable to the citizens, to our country. His sporting quality does not have to make us forgive his tax failures. This hurts fiscal awareness. We have also seen it with artists who have been investigated and even convicted of crimes against the Public Treasury. The dynamic has been repeated.
Now it's time for YouTubers, for streamers who are going to Andorra.
Young people understand why they go there to avoid paying taxes. But a good part of the public that follows them has little income, they have received aid from ERTE, unemployment benefits or their families receive public aid. And that comes from paying taxes. If these people whom they follow and admire do not correctly declare the payment of those taxes, they are the main losers. Many citizens do not see this.
Does defrauding still come cheap?
Who gets caught no. Anti-fraud measures and sanctions are no small matter. What happens is that on too many occasions, due to the lack of staff in the Tax Agency, little is achieved. There is room for improvement. Furthermore, internal regulations have disempowered technicians from investigating tax crimes and this means that since 2010, complaints for crimes against the Public Treasury have successively plummeted over time by 80%.
They denounce a “spiral of downward tax competition” between autonomies. Is it suitable? Does anyone really win?
Those who lose are the citizens. Taxes are one side of the coin, the other is public spending. Education, health, pensions, public aid, dependency... What is not paid with taxes prevents those expenses from being made. It is difficult to improve the quality of services or pensions if there is not enough income.
