If they knock down the tax: the Ibex wins, you lose

Good morning!

How is the week going? We are devastated by the horror of the loss of human life and material destruction experienced in Valencia due to the worst DANA of the century. It has affected other provinces such as Albacete or Málaga, but nothing compared to the virulence of Valencia. In these situations you realize the importance of public services. You understand why the Military Emergency Unit (UME) is necessary, which the right ridiculed when it was created, and you do not understand the reasons why the president of the Valencian Generalitat, Carlos Mazón (PP), eliminated the Valencian Emergency Unit . You understand the value of public health, of firefighters, of public workers who are trying to save lives and improve the situation in devastated areas.

Now I am going to clarify a question because it seems that the right does not fully understand: public services are paid for with taxes. Yes, as you may have heard before, “taxes are the price we pay for civilization.” They are necessary to avoid turning society into a jungle in which only the strongest survive, in this case, the richest. Therefore, it is necessary for the Government to maintain the special tax on banks and energy companies.

It’s going to be difficult because the PSOE seems to have given up. The socialists have reached an agreement with Junts and the PNV to make the special tax on banks permanent but at the same time overturn the tax on electricity companies. This pact does not have the support of Sumar, which has registered its own amendments in Congress to try to also include energy companies in the parliamentary process. It must be made clear that companies such as Repsol, Iberdrola, Endesa, Banco Santander, BBVA or Caixabank have been achieving high profits since the approval of the special tax without this new tax figure having caused a loss to their accounts.

But for several weeks now, the directors of energy companies and banks have started a smear campaign, threats and pressure against the coalition government to try to overturn the tax. If they succeed, Spain would take the opposite path to what international organizations propose. The International Monetary Fund (IMF) supports “structural fiscal reforms” that raise taxes on the richest and eliminate subsidies for companies. On the other hand, the finance ministers and central bank governors who participated in the last G-20 meeting pointed out that more progressive taxation “is one of the key tools to reduce inequalities.” […]reinforce the sustainability of public accounts and promote sustainable, balanced and inclusive growth.”

However, Spain seems to be going in the opposite direction. The first vice president and Minister of Finance, María Jesús Montero, already announced that the special tax was in the air. Both the PNV and Junts have aligned themselves with the interests of Repsol to stop tax imposition.

Furthermore, we must not forget that the European Commission has taken Spain before the Court of Justice of the EU this October for not having notified the transposition of the directive to impose a minimum rate of 15% in corporate tax on large multinationals. . The Government approved this measure in June, after having received a warning from Brussels, and the project is undergoing parliamentary processing. Be careful, the same thing can happen as with the tax on banks and energy companies and an absolutely uncaffeinated approach will emerge.

The parliamentary weakness of the Government is causing the nationalist right to dictate the fiscal policy of the central Executive. If they manage to overturn the tax, the Ibex wins, but you lose. If the tax is annulled, these multinationals win and public services lose.

Entrepreneurs

It is not just a matter of companies, the richest people continually look for ways to pay less and less taxes. Previously, SICAVs were the investment vehicles preferred by wealthy citizens, but the greater demands to be able to benefit from the low taxation of a tool for large assets that the coalition Government launched caused a reduction to a minimum of this business and the exit of two out of three clients. Now, money never sleeps and continually looks for ways out. If the SICAVs are no longer useful, another figure is set up: they are the “free investment companies” (SIL). They are vehicles that allow you to invest in shares, public debt, real estate or even works of art, but they have the advantage of being taxed at 1% in Corporate Tax. They require a minimum investment of 100,000 euros (reserved for professional investors) and at least 25 participants. A privilege only for the rich. Here we explain how Spanish billionaires leave aside SICAVs and start creating ‘SIL’ to pay 1% taxes.

The data

117,000 million euros

Foreign investors (funds, banks, insurers and retailers) have dedicated themselves to the purchase of Spanish public debt since the end of 2022. The interest of foreign capital in our debt overthrows the mantra of legal uncertainty that is constantly exploited by a part of the business community and the neoliberal right. The Spanish economic situation is solid, it is liked abroad, in a context that was unthinkable a decade ago: Spain finances itself cheaper than France. Not only debt is liked, in fact, the Financial Times newspaper highlighted in an article this week that Spain has become the sixth global destination for foreign direct investment – third in Europe – in sectors such as renewable energy, automotive, real estate. and electronic components. Here we explain how foreign investors devour Spain’s debt.

In this way, while companies do not want to pay the taxes they owe when they have record profits or billionaires find formulas to pay only 1%, the average Spaniard tries to save so as not to face eviction or ruin again. The household savings rate in Spain increased in the first half of this year to almost 14% of their gross disposable income. It is the maximum level since the record of the first part of 2021 and a behavior that surprises economists when the moderation of inflation is consolidated and there is a historic creation of jobs: new record with 21.8 million workers in the third quarter of 2024. What is the reason for this savings? A trauma, yes, a generational trauma. Raymond Torres, director of economic situation at Funcas: “It is the trauma of the financial crisis, which we know that in other countries like Japan left its mark on an entire generation. “Following the financial crisis, both households and businesses are tending to behave particularly cautiously in an uncertain environment.” Here we explain how the trauma of the financial crisis is driving family savings to exceed historical levels.

The graph

Saving is necessary to access the purchase of a home, an impossible mission for Spanish citizens and for those throughout Europe. Housing has become more expensive by 58% in the EU since 2014, but it has also skyrocketed well above wage growth in the vast majority of countries. This is how Europe is suffocating with housing prices.

Are you thinking of buying an apartment? We give you clues when choosing a neighborhood. Here we present the map of income inequality in Spain. You can explore the new median income data for each street (by census tract in 2022) after the pandemic and inflation crisis. A map that draws new internal borders, drawing gaps between the countryside and the city, the north and the south and the rich neighborhoods versus the poorest.

To solve the problem of high rental prices, the central government designed stressed areas where prices would have to be limited. The Autonomous Communities of the Popular Party have refused to implement them even though both the landlord and the tenant benefit. In fact, fiscally, the landlord wins. Here we explain how the tax benefits of stressed areas compensate landlords more than tenants with rent reductions.

Meanwhile, even though the situation can be desperate for many families, the abuses are repeated. Consumer Affairs investigates several agencies for abusive and illegal clauses more than a year and a half after the Law that prohibits charging tenants fees came into force. In this case we have taken red-handed and with a recording of an employee of the RedPiso agency in which she requested the agency’s commission. Here you have the real estate trap to continue charging rental fees.

Every time he speaks the bread rises

The sector has to do a serious reflection and try to explain to society that we are useful

José Ignacio Goirigolzarri
— President of CaixaBank

With these words José Ignacio Goirigolzarri tried to explain the scandal that has hit the president of BBVA, Francisco González, for the hiring of commissioner Villarejo to do work that prevented a takeover bid by Sacyr. It was 2019, when Goirigolzarri was president of a nationalized Bankia after a financial crisis that wiped out a good part of the entities in our country and financially suffocated citizens. This week the departure of a banking executive who has passed through the highest positions at BBVA, Bankia and Caixabank has been confirmed: Goirigolzarri will leave the presidency of the Catalan bank as of January 1, 2025. Goodbye to a banking history . Goirigolzarri, a survivor who left Francisco González’s BBVA and piloted the rescue of Bankia.

public good

Information helps make decisions. Nobody doubts the power of news to change public opinion or twist the arm of politicians when it comes to legislating. Companies know it, power knows it, politicians know it. Since the emergence of the Internet, journalism has to face digital intermediaries as much as business power to have access to citizens. The platforms have changed but the dependency remains the same because we are talking about traffic, which translates into advertising revenue. Spanish media have gone from depending on Facebook to Google Discover. The search engine’s algorithm is opaque but above all it generates large streams of traffic towards misleading content, worthless information or redundant notes from supermarkets like Mercadona. Just as it gives you, it takes away from you. Distributors of disinformation. Here is a report by Carlos del Castillo about ‘algorithm journalism’ and how misleading headlines and supermarket articles succeed.

We like competition

In this section we show you articles from other media that we found interesting:

We’re done. We’ll see you again next Thursday. You will have more economic news next Thursday, in a new newsletter. We remind you that you can follow us on social network X and you can write to us at [email protected] with your proposals, complaints or ideas.

Good week!