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Good intentions

The government declares war on tax evasion, but is yet to outline its strategy for job creation

Thursday's cabinet meeting, Mariano Rajoy's third since taking office, produced a raft of good intentions, all neatly summarized in the briefest of terms, but which will require detailed explanation if the electorate and the markets are to be convinced that this government has matters in hand. The sharp fall in the Ibex-35 index of leading Spanish companies and the spike in the cost of borrowing on the international markets would suggest that investors are far from happy at the lack of clear measures. The government has said that it is going to crack down on tax evasion, and that limits will be imposed on cash payments. Along with other measures, the aim is to raise 8.2 billion euros over the course of the year. Further good intentions were evident in the form of a request to the Bank of Spain regarding the bonuses paid to senior executives of banks that have been bailed out with public money.

The crackdown on tax fraud remains little more than good intentions until the tax office explains just how it intends to go about raising more money and preventing businesses and individuals from avoiding paying their dues, as well as detailing tax thresholds and other details. There is no faulting the government's intentions. Currently, around 300 billion euros goes unpaid. But the gradual collection of this money will not depend simply on locating evaders; it will also require huge changes to the law and tax regulations to allow for the collection of hidden money, along with sanctions. The Tax Office so far manages to collect just one euro in 10 that it discovers has been unpaid, mainly due to the legal problems in bringing tax-evasion cases to court. That is why Friday's announcement remains an intention ? a good one, but insubstantial.

The same can be said of the Tax Office's report, which fails to specify on which bodies, companies and public agencies the government intends to impose spending cuts to reduce the deficit. The government is talking about the need for greater austerity, but it has failed to detail just how it intends to reduce government spending, or where and how it is to make savings.

The simple fact of the matter is that the government has yet to reveal its economic strategy. Up until now, its decisions have been limited to applying budget cuts already put in motion by the previous administration, albeit more drastically. And all this without discussing the extent to which continued radical cuts will potentially further deepen the current recession. So far, the government has limited itself to applying the policies imposed by the European Central Bank to reduce Spain's deficit.

These measures may be necessary, but they do not reflect the policies that the PP promised during the election campaign, or even those outlined by the prime minister during his investiture speech. As recently as mid-December, Rajoy and Montoro said that they wouldn't increase taxes. The supposed ace up the sleeve of the PP was that it would create jobs. So far we have seen no sign of any policy on how to achieve that. Either because it did not fully understand the gravity of the situation, or out of electoral needs, the PP miscalculated when it promised to end the recession by creating jobs. The electorate, and particularly Spain's more than five million unemployed, are waiting to hear Rajoy meet his promise of telling the truth "even when it hurts," and explain his discrepancies so far, and what the consequences of them are likely to be.