Balancing the scales

The economic crisis is turning out to be something of a salutary shock, mobilizing the reformist leanings of some governments. These moves derive, of course, from the need to revise fundamental aspects of public finances. It is the scrutinizing gaze (not always rational and efficient) of the financial markets that imposes itself on the programs of the political parties, governing or not.

In only a week the Spanish government and the main opposition party have set their usual quarreling aside to agree on an unprecedented reform of the Constitution, writing into it an important limitation of the deficits of all levels of government. It seems probable that the government will likewise import other measures aiming to raise the fiscal burden borne by persons of greater income and wealth. Should this happen, this historic summer's legacy will also include a significant alteration of our tax structure, brought forward by the same government that not long ago reduced fiscal pressure on incomes, and eliminated the inheritance tax, with the (correct) explanation that it bore most heavily upon the middle classes.

In the appraisal of initiatives aiming to raise fiscal pressure on the rich, it is not easy to escape the sort of haste that has been orienting some fundamental decisions in economic policy. But in any case, the present one seems opportune. The arguments in defense of this hike in fiscal burdens on those who possess most should not need to derive moral support from the unusual, though intelligent gesture made by the holders of certain great fortunes in the US, Germany and France. In Spain no such persons have stepped forward, in spite of the invitation made to the Spanish rich by Popular Party spokesman Esteban González Pons.

However, there are good reasons for implementing such a tax hike in a country where the distribution of income and wealth is far more unequal than in the average advanced European Union economy. An additional, no less relevant reason is that the Spanish economy possesses a degree of development, of modernization and of public capital far inferior to those other economies in which, even now, the taxation system is more progressive than ours. Input from higher incomes is also justified by the fact that the distribution of the costs of this crisis and, in any case, the possibilities of overcoming its effects are very unequal in Spain. The exceptional rate of unemployment now reached and the very serious difficulties in reducing it in the short term speak for themselves.

It would be very reasonable if the same diligence accorded to decreeing budget restrictions, which will go on affecting social expenditure and public investment, were also applied to the raising of taxes on major fortunes and financial transactions. A revision of the distribution of fiscal burdens must, in any case, be no hindrance to more effective prosecution of the various forms of tax evasion and concealment of assets - a field in which Spain also occupies an outstanding position.