Spain gets serious about tackling the “black economy” – naaaah

Spain, which is under intense pressure from the financial markets and the EU to deal with the “black economy”, has finally announced the specifics of a new plan to combat tax evaders.

Remember, the “black economy”, which consists of not declaring income, tax evasion, not signing workers onto the social and the like, accounts, according to some economists, of up to 25% of Spain’s GNP.

The plan consists of giving the tax office (Hacienda) more power to nose around, crosslinking a number of government files to automatically detect “irregularities” (especially in the renting of apartments without paying tax; the tax office will be checking the utility bills against properties declared empty) and increasing sanctions.

By a lot.

The plan itself has been riduculed by Spain’s economic blogosphere as being a waste of time, as it just makes current fines higher and doesn’t really address any of the pressing issues, such as increasing site inspection visits to detect workers who haven’t been given a contract or making it easier to sign on and off autonomo to allow the self employed to pay taxes on short term jobs.

Instead, everything will remain much the same, except that the fines are a lot higher.

So, what are the new fines?

Well, a company can now be fined between 3,126€ t0 10,000€ for every employee found working who is not on the payroll (before, the fine was 626€ to a maximum of 6.250€ per head).

And anyone caught working whilst drawing the dole, or being on sick leave, now gets fined a whopping 10,001€ – 187.515€.

That’s right – if you’re caught behind the counter helping to wash up the dishes on a busy night when you’ve offered to help out, when the policeman walks in, and you’re not on a contract, the minimum on-the-spot fine (with almost no legal right to appeal!) is 3,126€.

Ouch.

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3 Replies to “Spain gets serious about tackling the “black economy” – naaaah”

  1. People who don’t pay taxes they should, collect the dole when they shouldn’t etc are thieves and penalise the rest of us.
    BUT paying the little South American for 3 hours gardening, giving your friend a hand at the bar etc are not what this should be about.
    When will governments learn – cut the bureaucracy, dump the restrictive labour laws, simplify the tax system – as Mr. Punch said “Thats the way to do it!”
    My guess is you would get less cheating,less corruption and more taxes in the coffers.

  2. This old chestnut eh ? The press peddled the same warning last year,and probably will do next year aswell…

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