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Uneasy living in the fiscal world

The chaotic handling of the amnesty annuls the revenue-gathering effect

The fiscal amnesty proposed by the Finance Ministry, under the euphemism of fiscal regularization, is eroding the credibility of the tax-gathering administration due to a number of contradictions in interpretation, on top of the generous concessions made to tax evaders. While the initial proposal of the ministry headed by Cristóbal Montoro was already questionable, permitting, by means of a royal decree, the laundering of undeclared funds in exchange for a modest levy of 10 percent, the more recent interpretations of the General Tax Administration define an amnesty even more onerous to public revenue collection, and humiliating to the citizens who pay their taxes. Because what is apparent in the administration’s interpretation is that in certain easily arranged circumstances, the evader will pay not even the paltry 10 percent for the income brought to the surface, but only for the interests and dividends generated by that income.

Such is the amnesty (or regularization) proposed by Montoro in Congress. Either the minister concealed the real content of the measure, or the administration has made a complacent and abusive interpretation of the norm. It appears that the contacts made between the technical echelons of the Finance Ministry and tax consulting firms, aimed at getting the latter to urge their clients to regularize their undeclared capital, soon came up against the holders’ disinclination to regularize their funds; and that, in the face of the probable failure of the amnesty’s objectives (collecting some 2.5 billion euros this year) the administration has opted to ease the conditions of the regularization, with the drawback that at such low rates it will still prove very difficult to arrive at that figure.

In terms of mere ineptitude, the handling of this fiscal amnesty borders on the scandalous. After the administration report which, among other inconsistencies, denies that the tax inspection service can check the special regularization statement, either the minister or the administration should retract their words; and both should offer explanations in Congress. All this stands apart from the question of whether the supposed fiscal regularization was ill-conceived from the start — no one with tax-related experience having taken seriously the proposition that 25 billion euros in undeclared funds might be brought to the surface, and 10 percent of it collected.

The malaise caused by this amnesty is apparent in the fact that the tax inspectors, with tax law on their side, have refused to go along with the administration’s interpretation. The administrative conflict is aggravated by the presumption that the Constitutional Court may annul the amnesty, if only because it was forced through in the form of a royal decree.

If it was anyway unlikely that an evader would declare money paying zero tax, so as to pay 10 percent on it, the present confusion further reduces the chances of obtaining significant revenue by the tortuous route of this uncertain amnesty.