Government garners 1.2 billion euros from tax-dodger amnesty

The government’s controversial amnesty scheme for tax dodgers, which closed at the end of November, swelled the state’s coffers to the tune of 1.2 billion euros, Finance Minister Cristóbal Montoro announced on Monday. The figure is well below the target of 2.5 billion euros the Popular Party administration had set. However, Tax Agency officials had calculated the amount recovered from what were previously black-economy funds at only 149.6 million euros as of the end of October, suggesting a spate of last-minute acceptances.

The amnesty offered those declaring undisclosed assets the possibility of paying only 10 percent of the value of what was declared. That compares with the top personal income tax rate in Spain of 56 percent.

Speaking at a seminar in the Andalusian town of Mijas, Montoro estimated the amount of back-market assets declared at 12 billion euros. “It allows us to take in much more at a vital moment for financing public services and meeting the public deficit target,” Montoro said in remarks carried by newswire Europa Press.

Spain is struggling to meet its deficit-reduction target of 6.3 percent of GDP for this year. On Friday, it opted not to fulfill its pledge to top up pensioners benefits to compensate them for a loss of spending power due to inflation coming in well above the official target. This would have cost the administration about four billion euros, split between the end of this year and the start of 2013.

The legality of the amnesty is still pending a ruling by the Constitutional Court in response to a suit filed by the main opposition Socialist Party. Tax inspectors had also objected to the measure as unfair.