Finance Ministry hits turbo on taxes

The crisis is putting a lot of financial pressure on taxpayers. The 30 tax hikes that Rajoy's government has implemented has increased the level of taxation in relation to earnings. Citizens now pay 40 cents in taxes for every euro earned on average. This rate is higher than others in Europe, including Germans and Norway, who both enjoy better welfare states than Spain. Cristóbal Montoro, who follows a strategy completely opposite to the Peoples' Party and has received criticism from his own party for doing so despite claiming that tax pressure is now lower.

This belief just isn't true if you measure overall taxation against national GDP. Tax revenues are dropping because the economy is stalling, not becuase taxes were lowered.

The highest tax burden is on non-salaried workers, who pay an astoundingly high 52% to personal income tax to the state. Not suprisingly, it is Spain's highest yielding tax. The Social Security tax is also high, and traditional tax deductions have been slashed for companies that earn more than 20 million euros in revenues annually. The VAT has gone up noticeably this year. Taxes on savings and other so-called "special taxes" have also increased, confirming that a long list of higher taxes will stall growth, consumption and employment.

Withs its misguided tax strategy, the government decided to raise taxes in order to cut the national deficit without curtailing its own spending or making enough structural reforms. Apart from the fact that this move will enervate the national economy, even the new tax revenues are showing signs that they are slowing down. We need a reform program that cuts tax rates and incorporates a wider range of taxpayers.