Revealed: Spain’s great consumer tax rise rip-off

In Britain it’s called Value Added Tax (VAT), though where the ‘value added’ is remains a mystery. Elsewhere the self-same iniquity is levied across the European Union, enjoying different handles – here in Spain we call it IVA, while in France it is known as TVA and in Denmark, Finland and Sweden the acronym is the cuddly-sounding, but equally-detestable Moms.

First introduced in 1954 in France, it was based on a wunderbar wheeze for a universal consumer tax coined in 1918 by German industrialist Wilhelm Von Siemens.

Unlike far more equitable income tax, VAT/IVA/TVA or whatever nonsensical tag it poses under is basically pernicious, since it is applied without demur across all demographic groups and consequently hits the poor hardest.

This, though, is generally in keeping with EU custom and practice, since the Europrats of Brussels couldn’t think their way out of a paper bag and their one raison d’etre is keeping their juicy jobs at whatever cost to the people of member nations they allegedly serve or soak (take your pick).

Nations are free – to a limited extent – to fix their own levels of said tax. So, in an effort to dig itself out of the self-impose doo-doo caused by a rampant house-building and lending boom, a couple of months ago the Spanish Prime Minister, Mariano Rajoy, announced IVA would rise from 18 to 21% from September 1. To those without a calendar, that was six days ago – a salutary date, as I will endeavour to explain.

To the best of my knowledge and that of 43 million Spaniards, Senor Rajoy never uttered a syllable about the IVA rise being applied retrospectively.

PHONE-A-FIDDLE? Consumers want to know why Telefonica has levied the new 3% tax rise a month early

That fact, however, appears to have conveniently escaped the attention some of the country’s major service providers – notably Telefonica, Spain’s answer to BT and, in its guise as O2 and Movistar, the fifth largest mobile network operator in the world (revenue in 2011: €62,837 billion / profit: €6,187 billion / assets: €129,623 billion).

As I write, a blizzard of monthly bills is cascading through Spanish consumers’ letterboxes with IVA levied at the new rate of 21%, despite the fact that they cover calls and internet services for the month of August, when the tax was still calculated at 18%.

Perhaps this is a technical blip, an accountancy blunder. On the other hand, maybe this is just another example of mega-corporations ripping off customers, with the blind-eyed connivance of government.

Some explanation is required rapido and a good many hard-done-by working folk, who rely on phones, mobiles and internet connections for their dwindling jobs would like to hear it.

Over to you Senor Rajoy…


One thought on “Revealed: Spain’s great consumer tax rise rip-off

  1. Arye Berest says:

    another thought and a view you may wish to articulate on.
    it struck me that all those elected, and Mr Rajoy being one of the latest, have been vesting their skills , time and energy in..getting ELECTED ! rather in understanding the issues and seek a universal solution in lieu of the ”simple ” route of taxing and more taxing its citizens. this goes long way back to the times that high taxes were imposed on gasoline – some 70%- payable when you stick the hose into your tank even before you have started your vehicle. tax has been a simple ‘smart’ way to budget excessive and large governments rather focus on competitiveness, productivity etc. and tax companies and individuals on the REAL profit they will be making.
    have a look around: who are the prosperous countries around us -and i mean real countries with real economies, not Monaco, Andorra or Liechtenstein – Hong kong, Singapore, where taxes are the lowest [except on car purchase to discourage same due to lack of space] these countries are booming and even in a downtrend of the global economy they continue to do so. taxes ,why not to learn from them? in spain its keeps changing on a regular and frequent basis! no one is able to set out a business model as he may find himself out-of -business soon after he has started. the Real Estate market, Spain main pillar, has collapsed not only because of the banks irresponsible lending policies but very much due to the lack of foreign investors who no longer view spain as a trustworthy investment designation. just imagine; Rajoy government declares that all capital gain on property would be By Decree by LAW to be as low as 10% , and for every one, be it spanish, non-spanish, a company or individual. guess how much capital will start flowing in? that will remedy the economy much faster than an increase IVA/TVA/VAT….what ever you call it



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