The first vice president, Nadia Calviño, boasts that the Spanish public debt with respect to GDP is falling despite what catastrophists have been warning. It is a half-truth, like all the big lies, and it had to be the president of the ECB, Christine Lagarde, who came out to ask governments like the Spanish, Italian or French to prepare, since inflation is generating a debt mirage that may explode in the future.
It is true that in the first instance the debt to GDP falls, due to the increase in the denominator. By raising the price of the goods and services that are produced, the volume of GDP is greater, we could say that it is "inflated" and, therefore, the weight of the debt is less. But when inflation normalizes to growth of 2%, GDP will "deflate" and that comparison will turn against it.
But, in addition, the trend of increasing public spending will aggravate the debt, since social spending cannot be cut, even if tax revenues decrease. For example, pensions. Without forgetting that the burden of debt service will become one more slab for the public accounts.
This means that the government that comes out of the polls will have a difficult ballot to resolve. The cumulative effect on public debt could lead Spain in the medium term to a debt crisis like the one that occurred in 2010, when José Luis Rodríguez Zapatero had to acknowledge that Spain was on the brink of default and announce the largest cut in social spending in the history of democracy.
Faced with this situation, there will be no choice but to raise taxes and cut spending. A situation reminiscent of what Mariano Rajoy had to face when he came to government with the promise of lowering taxes and was forced to do the opposite.
When a country is on the verge of bankruptcy and the situation is critical, there is no choice but to raise taxes. This is what happened in the United States after the crash of 1929, when Franklin D. Roosevelt raised the maximum rate for great fortunes to above 90% for 20 years. Something similar happened in Spain during the first years of the transition, when in 1978, in the midst of a terrifying economic crisis, Adolfo Suárez had to place the maximum rate of personal income tax at 65.5%. It is currently at 47%, ten points less than in the US.
It is now, when the electoral campaign begins, when the fiscal debate must be seriously opened, since it must be the citizens who decide if they should raise taxes to maintain the welfare state or prefer that they be lowered even if they have to be cut. Basically, this is the debate between the left and the right, a debate that has become polarized by the presence of Vox and Podemos.
It is true that raising taxes on the rich has its audience, but it does not solve the problem because most of the income is obtained by the State from the middle classes. Therefore, they will be the ones that will suffer the rise in tax pressure, as has always happened. And there is not so much public there, since the vast majority of the working middle class does not want taxes raised.
In the end, the only solution will be a restructuring of income and expenses that corrects an inefficient and unfair tax system. Excess bonuses, subsidies and loopholes for tax evasion require comprehensive tax reform. And of course, it is necessary to change the mentality of those who believe that "public money belongs to no one", when the reality is that "the Treasury is all of us".
