Why are we (Spanish) being pushed down with this new taxation?

Hello,

I´d like to ask something about my country (Spain) , and the crisis we are dealing with.
Yesterday the President announced the decision of going up the I.V.A (Impuesto del Valor Añadido), which is put to any good and service.

We used to have 16%, then 18% and now, from today on, we´ll have 21%. That tax includes everything: If you buy a pack of cigarretes or a computer or a beer, you have to pay now 21% , rather than 16% as we used to.

People are claiming that that would be a total disaster. All the people in the street say that with that taxation or tax, nobody is going to consume and therefore, the country will tear apart.

This measure is enforced from Brussels and specially from Merkel (Germany). They are going to rescue our economy through a loan and they are enforcing certain polcies such as the one I named a moment ago, the increase of the IVA, to 21%.

I am just wondering how if ordinary people, not knowing nothing about Economics, know this, how can it be possible that the great Economist in Europe, in Brussels (headquarter of the EU) don´t know they are going to destroy our economy by enforcing us to lift/go up that basic taxation.

Is it that they don´t know or they don´t care about Spain?

I am really confused why we are to be raised that tax if that eventually will destroy our economy and, if so, who wants to destroy Spain´s economy?

I really don´t get it.

Thanks in advance!

 

Bad policies like reckless spending and job-killing Green measures bear consequences. Big government costs upkeep. What happened with that German offer initially proposed as a joke years ago to buy Majorca off Spain for x-amount of billions, since 80% of the island's economy was German owned? Will there be talk about Madrid now?

 

Same thing was said about greek islands. And it's not only a joke but an insult. Germans should know their place, even though merkel can't point berlin on the map.

 

Ironic isn't it, that this crisis has coincided with the tidal wave of immigration from the third world and muslim countries in particular, and eastern europe. But you are not allowed to say that this is a major reason. Yes, the banks. Their arrogance and stupidity. But there have been countless ups and downs with the banks over the decades. Its not as if they've only just started doing what they are. What IS new is the muslim countries across the board all seeming to decide to relocate into the christian countries. (Others from Africa and China too of course) and the fact the vast majority - the overwhelming majority - are making no attempt to contribute, let alone work, and this ISN'T a major cause ? Not THE cause but certainly at least on a par with what the bankers have done.
Example - a few months ago there was outrage when official documents in Britain revealed the mess Labour allowed from Pakistan and India - there were very few GENUINE applications to enter Britain legally, most were to go to Universities, and have a certain amount of money. The majority when examined where to Universities or Colleges THAT DIDN'T EXIST - and once they were here, they stayed (their "human rights" - Jesus....) and were a weight on already stretched services, but one case showed it all up for what it was. One Pakistani couple had applied to go to Universities. False University of course, and no skills, no nothing. They were both PENSIONERS. They immediately applied for everything once here in Britain. They contributed not one penny towards what they were getting. They came from Pakistan like so many others as Benefit immigrants. We are told that there is a Pension crisis.
THIS IS WHY.
All linked to the lunacy of "Human Rights"
Europe is paying for it

 

Raising the IVA (or VAT(Value-Added Tax) in English) is the most effective tax imaginable.

With the current crisis, there already is, or will come, a big black economy. Raising the VAT will not counter that, but it will make sure that the Spanish Treasury will get a piece of the pie.

Further more, even if Spanish consumption will go down -- it will not matter, since the logic is that Spanish people will (1) put their money with the bank... (Spanish bank need re-capitalization, so it will help banks) or (2) will invest regardless (e.g. in housing market) since inflation is higher than the interest you get with the bank...

But maybe Ryanm34 can give her insight -- she's the economist and Irish.

 

Destroying the economy isn't the issue here , the issue is for the overlords to squeeze every last euro out of you then buy country's wealth for a penny . Those guys in Brussels are not "great economists" but common thieves. BTW i am in Greece and i know what will happen in Spain because it is already happening here.
Understand that elections and already existed political parties will never change anything, never ever !

Where you go from the bottom is up to you either you accept your fate and live like a dog or you start singing about La Passionaria again.

 

Yeah, with the raise from 16 to 18, do you know what was the result: less consumption and lower incomings from the government, guess what will be the consequence with this new raise

Spanish people is considering to take out money from banks And Spanish won't invest because there is no money for that.

 

Phil K - I don´t see the connection between muslim emigrating and the crisis, but it seems interesting your post.

Janpor - So, you really think raising VAT is the solution? really? , just asking, I am a newcomer, know nothing about Economics, but Kilgram says the other way around, that raising VAT, as even ordinary people say, will be a disaster.

Mutmekep - Who are the OverLords? Who are you refering to? The Banks? the great Banks? the IMF, the World Bank, the Fed in the US? . So, Economists in Brussels are just thieves that only want Spain to become bankrupt, but many people say that that would be very dangerous for European Union, that it would be contagious.

Kilgram- Your reasoning seems fine except for one thing: Who can you, I, my mother, etc , know that raising the VAT is the worst and yet, Economists in Brussels want to apply that terrifying policy? . I mean, if Rajoy, our president, saw that the effect of raising the VAT to 18% was a disaster regarding new expected income, how still he wants to raise it even further?

 

I am reading right now that UK raised the VAT from 17.5% to 20% in 2010 ...and I wonder what the consequences have been for them.

This seems a key factor to me, if UK succeded doing so, why can´t Spain succeed?

This article points out how the IMF advises Spain to raise the VAT too:

http://elpais.com/elpais/2012/06/15/inenglish/1339779294_533737.html

 

That same tax is 25% in Denmark. So, no, I don't think that would destroy your economy. Reckless spending while expecting someone else to pay for it (aka socialism) will destroy your economy.

 

I think that what the international banking community is doing to Spain now (and Greece, and then Portugal soon) is what is called the classic "market differentiation". This is always used to define the prices of products that are marketed in large volumes over large areas. This will certainly not be any different if the product is a loan package, the market is the global credit market, and the price is the price of the money (interest). (Just like for example you can't buy the same game for your x-box in the US and the UK unless you buy both a US and a UK x-box, even though the games are the same and the x-box gives the same user functionality.)

 

The rate of VAT changes here depending on the economy and the Government. It was reduced when this current economic crisis began, but they couldn't keep it low for long because it reduces the revenue income.

They are all floundering about, trying to balance income with growth. If they reduce taxation, growth reduces and government income with it, plus things like unemployment increase and that increases the drain on government spending.

Good luck. Spain is a country close to my heart and I hope you manage to ride out the firestorm.

 

HAHA more neoliberal bullcrap !
Spain had a surplus in budget .

When they first risen the VAT by 3% here the immediate consequence was 15% decline in government revenues.

 

GB is passing also for a lot of troubles. But about that is not spoken.

And? You cannot compare economies. As I said, when it was raised from 16% to 18% it affected negatively to the economy. Do you think that this new raise from 18 to 21%, and more that things that were in reduced 8% pass to 21% that won't affect? Do you think that people will continue buying that products, except if it is absolutely necessary, and they aren't.

And the nonsense of socialism is to laugh. What is destroying the economy is the neoliberal policies. And do you think that a country with more than a 20% of unemployment(55% of youth unemployment), with most of people with jobs earning less than 1000€ and the same costs of the things as in Germany or Denmark, can afford a new raise of the prices?

It is clear that the commerce will go down. And I hope the waking up of Spanish people and see serious revolts and better said a clear road to the revolution, however it is a dream, because Spanish people have been sleeping for eternity, and there is no possibility that they'll wake up.

 

This is simply great:

Viv -> "Raise of the VAT is good, more income for UK, we coudn´t keep the VAT low" . Viv, thanks for your wish that our Economy improves, there are a lot of families struggling here. Thanks!

mutmekep -> " They raised 3% of VAT and as a result, they obtained 15% less in revenue"

Killgran, I quote from you: "...As I said, when it was raised from 16% to 18% it affected negatively to the economy. Do you think that this new raise from 18 to 21%, and more that things that were in reduced 8% pass to 21% that won't affect? ..." . Kilgram, that so simple fact, don´t Economists know about it?

Conclusion: IT IS IMPOSSIBLE TO AGREE ON WHETHER OR NOT THE RISE OF THE VAT IS GOOD OR BAD FOR THE ECONOMY, JUST IMPOSSIBLE, GREAT!! ....Is there no reliable data on this issue, as the one said by Mutmekep, with numbers (3% of rise= 15 less in revenue)? . Why then IMF advices a rise of the VAT to Spain?

Great Dane: I know that Denmark and Sweden has 25% of VAT, but those two countries can afford it, they have stability ; it is, in my opinion, a totally different situation, not applicable to the countries struggling.

 

This is my view (totally in disagrement with the IMF and I guess there are a bunch of Economics intelectuals in the IMF to suggest the a rise of the VAT is advisable for Spain):

Drop in the VAT -> more consumption -> more profits for the shops, businesses, companies -> these companies will hire more people -> these new people hired will consume -> more consumption -> more profits for the small and medium-sided companies -> let´s hire more people and open new branches -> the new hired will say: let´s consume a litte ....

Rise in the VAT -> more direct revenue for the government but less consumption -> small businesses closes -> these new unemployed people unable to consume -> more small business closes -> more unemployed people unable to buy in the shops.

I simply don´t get why the IMF is advising Spain a raise in the VAT.

 

IMF is not advising Spain with the usual term of advise , they are trying to get them bust .
IMF predicted that Greece's economy will shrink by 10% in the last 3 years they run the show , economy shrunk by 22% , now the government is planning to sell the public electricity company for few hundred millions, the company owns coal reserves worth of over €300billions.
Bringing Spain down to their knees will make everything cheap for the sharks to grab .

 

Do you really think so?

IMF wants us to bust, what for? to make verything cheap?

I just can´t believe that. Ruin a country, killing people?. Who, why?

Who run the show?. Who are the sharks?. I read somewhere Spain´s ruin would affect other countries in the Eurozone and hence, it is not good for anybody.

Besides, you know this and no other Economist in Spain in the gabinet of Mariano Rajoy knows it?.

 

Don't listen to me just go and read what happen ANYWHERE IMF got invoved .
Countries and people are the least of plutocracy's concern , take for example how Spain was forced to save Bankia , would ever Bankia lift a finger to save Spain ?
Global speculators , plutocracy and banksters are the sharks , now you have this (*)(*)(*)(*) Juncker telling you what to do when each Luxemburgian is €3.4m in debt yes this is their per capita debt! now you have convicted for paedophilia Baroso dictating his terms.
Of course they know it but they are doing what they are told to do, if you believe that the governments have a say in developments you are dead wrong , looks like you forgot where Monti , Papademos and Draghi belong .

 

Thanks for the reply,

In short: IMF is controlled by the bankers, and they are forcing to fall down to Spain, Portugal, Greece...which countries exactly? I mean: Do they need to make fall down another one, do they need more countries? How many of them?

So, Spain falling, Global Speculators and Banks win, so with Portugal and Greece?

And UE, Merkel, Hollande, Cameron, and so forth they just don´t care either about Spain and Portugal tearing apart?

VERY INTERESTING YOUR POST.

 

I understand your tone perfectly , i don't know if you follow the news but see the parent : austerity measures has failed wherever they applied yet the answer to this is more austerity , eventually our countries will be destroyed . Now think who earns from all this , do big business like let's say European car makers win? no they don't they even close down fabs or go bankrupt , do the working class win? no , do established political parties win? no they get trashed for following unpopular and proven wrong policies.
So who wins ?

it isn't quantum physics ....

 

If they would, they would not have done what they do in Spain. There are many ways to reduce the deficit without strangling the economy.

Let's see the logic of what is done: Raise of taxes for everybody.

Raise of taxes for the enterprising, and more obstacles in the road of them, like having to pay the IVA(that has been raised) without being collected the bills(yeah logic).

How do you expect a country with all that bad conditions improve? The only possible result is more poverty. Because people won't consume, will be harder create new enterprises...

 

1. What I fail to see is why a little rise on the VAT is so bad. Let me explain myself: The electricity bill will be 1.85€ higher per month, plus 2€ from , etc, which makes a total, according to an statistic, of 50€ per month, due to this rise.

2. I wonder: Is not 50€ worth paying it to save a country?, I mean, societies have to make efforts, all their citizens, and paying 50€ more every month for a year, it is worth it , as long as they make economy boost.

Is 50€ so much an effort for a family?. I know that many families aren´t working, none of its members, so, that will be very hard now that I think about it. Probably a better measure would be for us (unemployed) not paying such a rise, so, the richer, the more taxation would sound logic to me.

I am really really puzzled with all the information I am having/collecting.

3. I really can´t understand how the government, if they know this so basic principle (rise vat=more unemployment=eventual destruction of the entire economy), don´t say: WE WON´T DO IT THAT WAY, BECAUSE WE WANT TO RESCUE OUR COUNTRY, AND THEY WILL TAKE OTHER MASURES, whatever they are. I want to stress that if Everybody, absolutely everybody in the streets know this fact, that simple fact, I can´t understand that Economists in the goverment don´t know, they have to know, and they advice to Mariano Rajoy, and Mariano Rajoy must stand and say: WE WON´T TAKE THIS MEASURE, WE WILL TAX RICH PEOPLE WITH 30% OF INCOME AND POORER WITH 10% AND UNEMPLOYED WITH 4% or whatever the measure is.

5. mutmekep, you say it is not "quantum physics" but I am really bad at this issues, then I guess you are refering to bankers, what bankers, bankers in Wall Street, in the UK, or that doesn´t matter?. Who wins? , the answer is bankes, isn´t it?. Bankers just don´t care about people suffering, people even commiting suicide, or such things, I really can´t believe that, I am very naive I suppose but I can´t really think there are people like that.

6. Merkel, Cameron, Hollande, etc, want their money back , I should suppose, then, how can they tell us that we rise the VAT? .If we rise the VAT, they won´t have their money back, will they?. I mean, the loan is about 100 billion €, don´t they want that money back? Are they going to let the bankers do their business without doing anything against those bankers? Who are really those bankers? Can I know where do they belong? Big companies, Goldman Sachs, ??.

7. This is what I don´t understand either: UK , in 2009, lower the VAT, and, as a result, they check that it is a very bad policy, hence, they rise it in 2010, and so far, I don´t know if UK Economy is going better or not. THIS IS A KEY QUESTION TO ME, THE ANSWER TO THIS QUESTION.

I feel too puzzled and angry.

 

I can't imagine paying a VAT that high. Right now I'm visiting an area with what i think is a really high VAT - 10%. That is the highest I've seen. The levels you pay in Europe just seem crazy to me.

 

It adds up and because it adds up people start cutting expenses and this stagnates the market , remember for the capitalist economy to run people need to have money

You are not saving your country you are only make it worst , all your money go to the bottomless pit of public debt with interest . Do you know that Greece has paid €422b in the last 15 years? and we are in debt €300b more when the accumulated budget deficit of those years is lower than €40b . Did you read that Spain is selling more bonds every now and then?

50€ are not much but then you have two family members fired , a special real estate tax and those who are still working have their wages cut by half ... and there is no indication that this will stop

Taxing the rich will have no effect, even if they have their property confiscated it wouldn't last long .
I am saying that the problem here is neoliberalism , countries are irrelevant and governments are just pawns , Rajoy is a little (*)(*)(*)(*)(*) that will chop his right hand to appease a bankster . Go into the internet and take a look where all those "government's economists" used to work , i don't know about the Spanish but i do know about the Greek ones and guess what... they are those who cooked our books so to enter eurozone ! and they were appointed by IMF/ECB !!!

It is not the banks as institutions it is those who run them , remember BANKIA 's guys cooking their books to present profit when they were at great loss? well they are now retired with a fat bonus for doing nothing they will never be persecuted and none will ever go to jail instead your government gives free money to bail them out and the bank return some of that money to the government with six times bigger interest.
It is a scum , the whole neoliberalism is a scum and all those guys are gangsters.

Their money? They loan at 1% interest and use that money to buy your bonds with 5% , they don't want any of that money back they only want you to pay interest, sell your national wealth and after you are brought to your knees rule you from Brussels .
This is not about countries , it is not that the Brits or the Germans are the bad guys because international finance has no nationality , eventually the crisis will get to them .

Look man my understanding of economics is at Neanderthal level but this is really easy :
When you throw billions into the banks money loses it's value, this is inflation .
Inflation is a big no no specially right now and it is a taboo for the German run ECB for historical reasons.
How you keep inflation down? you drive the population into poverty , yes unemployment , low wages and high taxes are not targeting "cutting down deficit" or "paying our debts" but to bring you on your knees , to bleed you out of all your cash so inflation is kept down and the value of money up for those who have it.


It is time for you Spaniards to start reading and it is time for all European south to be organised , we have nothing to lose only our poverty . Remember the enemy is neoliberalism .

This is a good reading for starters , take your time reading it .