While much of the talk about the rise in IVA (VAT) from 1 September has concentrated on the tourist industry and those businesses which will have IVA rates rise from a reduced 8% to 21%, spare a thought for parents who will have to buy material for the new school year that will now have a rate of 21% whereas it was only 4%. Consequently, parents are buying early to beat the rise.
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Showing posts with label IVA increase. Show all posts
Showing posts with label IVA increase. Show all posts
Tuesday, August 21, 2012
Thursday, July 12, 2012
Black Wednesday: The Spanish VAT increase
I realise that it is an unlikely scenario, but were Mariano Rajoy to come to your front door brandishing an invoice, what would you say to him? And be careful, because if you insult him, you might find that he scurries off and does you for impugning his honour, in the style of the Balearics El Presidente Bauzá ("inútil", "fascista", etc, in the words of union boss and serial insulter Lorenzo Bravo).
For a kick off, you would probably say that the IVA (VAT) he's charging you is going to have to be 18%. "You can date the invoice for before the increase comes in, Mariano (Sunday or Monday). That way, you can make it 18% and not 21%." "Yes, but there's the European Union and the IMF to satisfy. It's got to be later and at 21%." "Sorry, Mariano, either you make it 18% or you can bugger off."
There will be an awful lot of Marianos who discover that whatever invoices they should be raising for this quarter are suddenly being dated in the first week or so of July. Which assumes, of course, that IVA is even being applied; a big assumption. And the assumption will be even greater once the increase comes in. Three more points of IVA to pay. You've got to be joking.
But more fundamentally, the invoice that Mariano comes to the door with would not need IVA being applied. Not because it's being done black, whatever it is, but because there wouldn't be anything in the column for the base amount. You can't charge IVA, be it 18 or 21%, on zero. And zero, which is being generous, is about all that Rajoy's efforts since coming into office are worth.
Poor old Rajoy, you wouldn't wish his problems on your worst enemy, though worst enemy is precisely what Rajoy has become for many people. To the reprehensible and economically dubious use of taxation that isn't progressive, a move designed to lose him even more of his rapidly dwindling number of friends, he has the miners protesting in Madrid, the public workers unions threatening strikes as early as this month and all the other unions looking forward to yet another general strike.
To make things really ducky for Rajoy, he has the Europeans telling him that the Bank of Spain should be granted far more powers. There would be one bright note if this were to happen. He could get rid of at least one of the various of his ministers who seem to all do the same financial/economic/make-numbers-up tasks. As he's getting rid of other bodies in the public service, he may as well shed a minister or several. No one would notice, much as they wouldn't notice if Rajoy were to suddenly disappear in a puff of smoke left behind by the economics of slash and burn.
On top of all this little lot, Rajoy has to contend with the fury of the tourism sector. Let's just remind ourselves, shall we. Which political party, before the last national election, promised to cut the tourist rate of IVA? It wasn't PSOE, so it must have been ... . So it was. It was the Partido Popular and a prime minister who also made a pledge to tackle unemployment. And what better way to do this than hit consumers harder, meaning less of the disposable and therefore less spend, less business and fewer jobs. Or what better way than to load a greater tax burden on the so-called motor of the economy, the tourism sector, thus meaning higher prices, less spend, less business and fewer jobs. (I may question the morality of there being a reduced rate for the tourism sector when mostly everyone else is being slammed with 21%, but in the absence of any other signs of life in the economy, it is just about justifiable.) What better way than to increase IVA in a nation where the minimum salary is half of that in France, so meaning less spend, less business and fewer jobs.
Poor old Rajoy. His apologists will argue that he was sold a complete pup when he became prime minister. It is no argument. He wanted the job, but he should have come clean and said that there was precious little that he could actually do. Except bowing to the demands of the EU.
Originally, it was said the IVA increase would happen tomorrow, Friday the thirteenth. But don't worry about walking under ladders or black cats crossing your paths, because the 21% ton weight is going to fall from the ladder onto you anyway and the cat's about to piss on you. What an absolute bloody mess.
Any comments to andrew@thealcudiaguide.com please.
For a kick off, you would probably say that the IVA (VAT) he's charging you is going to have to be 18%. "You can date the invoice for before the increase comes in, Mariano (Sunday or Monday). That way, you can make it 18% and not 21%." "Yes, but there's the European Union and the IMF to satisfy. It's got to be later and at 21%." "Sorry, Mariano, either you make it 18% or you can bugger off."
There will be an awful lot of Marianos who discover that whatever invoices they should be raising for this quarter are suddenly being dated in the first week or so of July. Which assumes, of course, that IVA is even being applied; a big assumption. And the assumption will be even greater once the increase comes in. Three more points of IVA to pay. You've got to be joking.
But more fundamentally, the invoice that Mariano comes to the door with would not need IVA being applied. Not because it's being done black, whatever it is, but because there wouldn't be anything in the column for the base amount. You can't charge IVA, be it 18 or 21%, on zero. And zero, which is being generous, is about all that Rajoy's efforts since coming into office are worth.
Poor old Rajoy, you wouldn't wish his problems on your worst enemy, though worst enemy is precisely what Rajoy has become for many people. To the reprehensible and economically dubious use of taxation that isn't progressive, a move designed to lose him even more of his rapidly dwindling number of friends, he has the miners protesting in Madrid, the public workers unions threatening strikes as early as this month and all the other unions looking forward to yet another general strike.
To make things really ducky for Rajoy, he has the Europeans telling him that the Bank of Spain should be granted far more powers. There would be one bright note if this were to happen. He could get rid of at least one of the various of his ministers who seem to all do the same financial/economic/make-numbers-up tasks. As he's getting rid of other bodies in the public service, he may as well shed a minister or several. No one would notice, much as they wouldn't notice if Rajoy were to suddenly disappear in a puff of smoke left behind by the economics of slash and burn.
On top of all this little lot, Rajoy has to contend with the fury of the tourism sector. Let's just remind ourselves, shall we. Which political party, before the last national election, promised to cut the tourist rate of IVA? It wasn't PSOE, so it must have been ... . So it was. It was the Partido Popular and a prime minister who also made a pledge to tackle unemployment. And what better way to do this than hit consumers harder, meaning less of the disposable and therefore less spend, less business and fewer jobs. Or what better way than to load a greater tax burden on the so-called motor of the economy, the tourism sector, thus meaning higher prices, less spend, less business and fewer jobs. (I may question the morality of there being a reduced rate for the tourism sector when mostly everyone else is being slammed with 21%, but in the absence of any other signs of life in the economy, it is just about justifiable.) What better way than to increase IVA in a nation where the minimum salary is half of that in France, so meaning less spend, less business and fewer jobs.
Poor old Rajoy. His apologists will argue that he was sold a complete pup when he became prime minister. It is no argument. He wanted the job, but he should have come clean and said that there was precious little that he could actually do. Except bowing to the demands of the EU.
Originally, it was said the IVA increase would happen tomorrow, Friday the thirteenth. But don't worry about walking under ladders or black cats crossing your paths, because the 21% ton weight is going to fall from the ladder onto you anyway and the cat's about to piss on you. What an absolute bloody mess.
Any comments to andrew@thealcudiaguide.com please.
Wednesday, July 11, 2012
MALLORCA TODAY - General rate of IVA in Spain to increase to 21%
Mariano Rajoy has announced the latest round of austerity measures. The general rate of IVA (VAT) is set to rise to 21% from 18%, while the reduced rate for the likes of tourist services will increase from 8% to 10%. The lowest rate for basic necessities (though this does include newspapers) will stay at 4%.
The increases in IVA will come into effect on Friday, 13 July*.
Other measures include a rise in tobacco duty, the elimination of Christmas bonuses for public employees and the scrapping of the deduction on property purchase.
Reactions to the measures: The main unions are looking at calling another general strike. The hotels in the Balearics have called the rise in IVA to 10% a "lethal error". President Bauzá in the Balearics has described the measures as being essential.
* Now being said that the increases will come in on Sunday, 15 or Monday, 16 July.
The increases in IVA will come into effect on Friday, 13 July*.
Other measures include a rise in tobacco duty, the elimination of Christmas bonuses for public employees and the scrapping of the deduction on property purchase.
Reactions to the measures: The main unions are looking at calling another general strike. The hotels in the Balearics have called the rise in IVA to 10% a "lethal error". President Bauzá in the Balearics has described the measures as being essential.
* Now being said that the increases will come in on Sunday, 15 or Monday, 16 July.
Saturday, April 28, 2012
The Tax Calamity About To Arrive In Spain
There you are, standing on the platform waiting for the train of recovery to arrive and whisk you off to the promised land of growth, and what happens? Some idiot goes and derails the train.
Is Señor Luis de Guindos an idiot? It is a perfectly reasonable question because, and I quote from the news feeds, "next year will be time to increase the tax burden on consumption, once the economy starts to grow again". There is an awful lot wrong with this statement. In fact, there isn't anything that is right about it. "Once the economy starts to grow again?" When is this meant to happen?
Who is Señor de Guindos? It is another perfectly reasonable question, as no one seems to have the faintest idea who is in fact running Spain's economy. Rajoy can be discounted, as one fancies he is being sidelined by the rest of his party as he has shown a total lack of leadership. It could be the iron lady-in-waiting, the deeply worrying María Soraya Sáenz de Santamaria Antón (to name but a few), ostensibly the vice-president (or deputy prime minister, to be more accurate). Or it could be Cristóbal Montoro Romero, the treasury minister. Him, do you think? Who knows?
De Guindos is the minister for economic affairs and competitiveness, and he and Montoro have managed in the recent past to utter totally conflicting statements. Let's wait and see. Montoro will probably announce that there is to be a tax reduction rather than an increase.
For now though, we have to take de Guindos' word for what is going to happen in 2013. And this, bearing in mind it is coming from someone supposedly responsible for competitiveness, will entail an increase in IVA, or value added tax as the British would know it. He hasn't said by how much, but rise there will be.
Let's consider de Guindos' statement again. There is no growth at present. Indeed, Spain has fallen back into recession. Were there to be any growth, and that's a big "were", it would be negligible, but clearly de Guindos believes it's going to be of such magnitude that the time will be right to up IVA. Again. It went up last year by two percentage points.
It's all right of course, because the IMF says that this is the best strategy. Best strategy for what exactly? You don't need to have studied economics to know that increasing value added tax is a surefire way of stunting growth. Put it up and you cut consumption, which cuts growth. Simples. Moreover, a rise in IVA adds to inflation, thus penalising doubly those who can least afford price increases - the poorer sectors of society.
Increasing indirect taxation has not exactly been an overwhelming success elsewhere. Britain, for example. Double-dip recession has at least been contributed to by the rise in VAT. It's not as though Cameron had not expressed his doubts about VAT previously. "Regressive," he had called it. "Hits the poorest the hardest." So what did Osborne do?
It is regressive in two ways. One that it causes the economy to regress, the other that is the opposite of progressive, as in progressive taxation, otherwise known as income tax and variable rates depending upon income and means.
The apologists, and no doubt the Spanish Government, will argue that something has to be done about getting the Spanish economy out of its coffin with the lid on the point of closing and about signalling intentions to markets and the European Union which have all but given up on Rajoy. But signalling intention to do something in 2013 isn't going to stop the immediate problems Spain faces and the likelihood that future bond sales might not work.
There is a further problem. And that is the fact that the Spanish as a people spend their leisure time figuring out ways of not paying IVA. Put it up further and they'll be devoting even more of this leisure time.
And announcing an intention to increase IVA is going to unleash all manner of vested interests demanding that it is not increased in their sector. The hotels and the tourism industry, for example. They had hoped for a cut to what is in effect a tourist rate of IVA (8%) which wasn't forthcoming. They keep banging on about the necessity of a reduction for the tourism sector and the noise will get louder now.
Were, though, there to be special concessions for tourism (and in my view there most certainly shouldn't be), these would be an even more bitter pill for the general public to take. It would be wrong and would represent a caving-in to a powerful lobby. But increasing IVA at all would be wrong. It would be calamitous.
Any comments to andrew@thealcudiaguide.com please.
Is Señor Luis de Guindos an idiot? It is a perfectly reasonable question because, and I quote from the news feeds, "next year will be time to increase the tax burden on consumption, once the economy starts to grow again". There is an awful lot wrong with this statement. In fact, there isn't anything that is right about it. "Once the economy starts to grow again?" When is this meant to happen?
Who is Señor de Guindos? It is another perfectly reasonable question, as no one seems to have the faintest idea who is in fact running Spain's economy. Rajoy can be discounted, as one fancies he is being sidelined by the rest of his party as he has shown a total lack of leadership. It could be the iron lady-in-waiting, the deeply worrying María Soraya Sáenz de Santamaria Antón (to name but a few), ostensibly the vice-president (or deputy prime minister, to be more accurate). Or it could be Cristóbal Montoro Romero, the treasury minister. Him, do you think? Who knows?
De Guindos is the minister for economic affairs and competitiveness, and he and Montoro have managed in the recent past to utter totally conflicting statements. Let's wait and see. Montoro will probably announce that there is to be a tax reduction rather than an increase.
For now though, we have to take de Guindos' word for what is going to happen in 2013. And this, bearing in mind it is coming from someone supposedly responsible for competitiveness, will entail an increase in IVA, or value added tax as the British would know it. He hasn't said by how much, but rise there will be.
Let's consider de Guindos' statement again. There is no growth at present. Indeed, Spain has fallen back into recession. Were there to be any growth, and that's a big "were", it would be negligible, but clearly de Guindos believes it's going to be of such magnitude that the time will be right to up IVA. Again. It went up last year by two percentage points.
It's all right of course, because the IMF says that this is the best strategy. Best strategy for what exactly? You don't need to have studied economics to know that increasing value added tax is a surefire way of stunting growth. Put it up and you cut consumption, which cuts growth. Simples. Moreover, a rise in IVA adds to inflation, thus penalising doubly those who can least afford price increases - the poorer sectors of society.
Increasing indirect taxation has not exactly been an overwhelming success elsewhere. Britain, for example. Double-dip recession has at least been contributed to by the rise in VAT. It's not as though Cameron had not expressed his doubts about VAT previously. "Regressive," he had called it. "Hits the poorest the hardest." So what did Osborne do?
It is regressive in two ways. One that it causes the economy to regress, the other that is the opposite of progressive, as in progressive taxation, otherwise known as income tax and variable rates depending upon income and means.
The apologists, and no doubt the Spanish Government, will argue that something has to be done about getting the Spanish economy out of its coffin with the lid on the point of closing and about signalling intentions to markets and the European Union which have all but given up on Rajoy. But signalling intention to do something in 2013 isn't going to stop the immediate problems Spain faces and the likelihood that future bond sales might not work.
There is a further problem. And that is the fact that the Spanish as a people spend their leisure time figuring out ways of not paying IVA. Put it up further and they'll be devoting even more of this leisure time.
And announcing an intention to increase IVA is going to unleash all manner of vested interests demanding that it is not increased in their sector. The hotels and the tourism industry, for example. They had hoped for a cut to what is in effect a tourist rate of IVA (8%) which wasn't forthcoming. They keep banging on about the necessity of a reduction for the tourism sector and the noise will get louder now.
Were, though, there to be special concessions for tourism (and in my view there most certainly shouldn't be), these would be an even more bitter pill for the general public to take. It would be wrong and would represent a caving-in to a powerful lobby. But increasing IVA at all would be wrong. It would be calamitous.
Any comments to andrew@thealcudiaguide.com please.
Thursday, January 21, 2010
Smokey And The Banned-It: Part Two
Following up on yesterday's piece about the smoking ban, the local health minister has dismissed - as you might expect - the idea that this will lead to "total ruination" of the bar and restaurant sector. She has also sought to remind everyone that the ban is part of a wider European Union-inspired drive to enforce total prohibition in public places in all countries by 2012. When all else fails in the winning of hearts and minds, blame it all on Brussels. She has also been at pains to point out that more stringent enforcement has been applied elsewhere, such as in the UK, so that's alright then; it's all a question of degree. Where she has more justification is in pointing out that a ban has not proved to be particularly harmful in Italy, another grand smoking country, and though the measure has proved to have popular support in Italy, she might have added that Italian bar owners have been adept at finding the odd loophole. Without naming them, she says that bans have resulted in increased numbers of customers in some countries. It might be interesting to know which ones.
As always, it comes down to how politicians want to spin the issue. Sra. Buades (the health minister) has not seemingly referred to the Croatian backtracking or to the lack of enforcement in Greece, but despite all this, one can pretty much safely assume that the ban in Spain, and therefore Mallorca, will go ahead, albeit that no date has been set.
On this topic, my thanks to Dave for drawing attention to the harmful impact of the smoking bans on country pubs in Scotland. He calls for "more freedom to choose, less proscription". Amen to that, whatever the cause, only problem being, Dave, that Europe ain't going to let there be a choice.
IVA and tourism
The Spanish Government has been getting it in the neck again about the decision to increase IVA (VAT). At the annual leaders in tourism forum in Madrid, staged by the hotel and tourism association Exceltur, the president of this association has stated that the increase is a mistake. Almost no-one seems to think it is a good idea, especially as tourism in other countries has been treated more kindly in having tax cuts. The president believes that the Government has not shown tourism the same consideration as it has other sectors of the economy. Elsewhere, there have been calls to bring the rate of IVA for tourism-related business down to 4%, which is the rate currently applied to newspapers.
At this forum, the great and good of the tourism world have been having their say as to the travails of the Spanish tourism industry. More is needed in terms of modernisation, there is over-supply etc, etc. None of it new in other words. And nothing concrete being offered either, unless you count the concrete that would go to improving infrastructures. One does have to wonder about these forums and conferences. Statements of the bleeding obvious but no obvious plans or suggestions.
Señor 80 Cents - Café Zapatero
And something else for the Spanish Government, specifically Sr. Zapatero. Recently, I discovered that he is widely referred to as Mr. Bean. I hadn't appreciated this to be the case, having myself dubbed him that on the day he first won the presidency. Physically, there is a resemblance, but it was his manner, when he won the election in 2004, more than appearance, that smacked of Rowan Atkinson's character. He hadn't been expected to win. As a consequence, he looked sheepish, awkward, perplexed and not a little bit like he was out of his depth. And a few months ago, he made what has been a celebrated gaffe. On Spanish TV, there is this thing called "I've Got A Question For You". President Zap was grilled by an audience, one member of this asking him to give the normal price of a coffee. 80 centimos came the response, accompanied by tittering in the audience. The youtube* of this finishes with the president saying "depende", i.e. it depends, which is true. Depends where, what type of coffee and so on. You could get a coffee for 80 cents, though it would be unusual. The Dunkin Donuts chain has now started its own 80 cent coffee, an "anti-crisis coffee", promoted with the help of a photo of a Zapatero double. Who could that be? Mr. Bean perhaps. And no, no jokes about coffee beans, please.
* http://www.youtube.com/watch?v=4382KyAnP-M
Any comments to andrew@thealcudiaguide.com please.
As always, it comes down to how politicians want to spin the issue. Sra. Buades (the health minister) has not seemingly referred to the Croatian backtracking or to the lack of enforcement in Greece, but despite all this, one can pretty much safely assume that the ban in Spain, and therefore Mallorca, will go ahead, albeit that no date has been set.
On this topic, my thanks to Dave for drawing attention to the harmful impact of the smoking bans on country pubs in Scotland. He calls for "more freedom to choose, less proscription". Amen to that, whatever the cause, only problem being, Dave, that Europe ain't going to let there be a choice.
IVA and tourism
The Spanish Government has been getting it in the neck again about the decision to increase IVA (VAT). At the annual leaders in tourism forum in Madrid, staged by the hotel and tourism association Exceltur, the president of this association has stated that the increase is a mistake. Almost no-one seems to think it is a good idea, especially as tourism in other countries has been treated more kindly in having tax cuts. The president believes that the Government has not shown tourism the same consideration as it has other sectors of the economy. Elsewhere, there have been calls to bring the rate of IVA for tourism-related business down to 4%, which is the rate currently applied to newspapers.
At this forum, the great and good of the tourism world have been having their say as to the travails of the Spanish tourism industry. More is needed in terms of modernisation, there is over-supply etc, etc. None of it new in other words. And nothing concrete being offered either, unless you count the concrete that would go to improving infrastructures. One does have to wonder about these forums and conferences. Statements of the bleeding obvious but no obvious plans or suggestions.
Señor 80 Cents - Café Zapatero
And something else for the Spanish Government, specifically Sr. Zapatero. Recently, I discovered that he is widely referred to as Mr. Bean. I hadn't appreciated this to be the case, having myself dubbed him that on the day he first won the presidency. Physically, there is a resemblance, but it was his manner, when he won the election in 2004, more than appearance, that smacked of Rowan Atkinson's character. He hadn't been expected to win. As a consequence, he looked sheepish, awkward, perplexed and not a little bit like he was out of his depth. And a few months ago, he made what has been a celebrated gaffe. On Spanish TV, there is this thing called "I've Got A Question For You". President Zap was grilled by an audience, one member of this asking him to give the normal price of a coffee. 80 centimos came the response, accompanied by tittering in the audience. The youtube* of this finishes with the president saying "depende", i.e. it depends, which is true. Depends where, what type of coffee and so on. You could get a coffee for 80 cents, though it would be unusual. The Dunkin Donuts chain has now started its own 80 cent coffee, an "anti-crisis coffee", promoted with the help of a photo of a Zapatero double. Who could that be? Mr. Bean perhaps. And no, no jokes about coffee beans, please.
* http://www.youtube.com/watch?v=4382KyAnP-M
Any comments to andrew@thealcudiaguide.com please.
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