Spain walks tax reform tightrope

Spain’s government has bowed to pressure at home and abroad by committing to tax reforms it hopes will boost public revenues without choking off a fragile economic recovery before parliamentary elections in 2015.
But it faces a series of politically unpalatable options for raising one of Europe’s lowest tax takes, suggesting it will divide up the increased fiscal burden among a recession-weary public with one eye on its chances of staying in power.
Spain’s tax take has fallen almost 50 billion euros ($66 billion) since the downturn started six years ago, putting total revenue at 36.4 percent of gross domestic product in 2012, nearly ten percentage points below the European Union average.
“Our tax system simply does not work,” president of tax inspectors organization IHE Ranses Perez Boga said. “It doesn’t bring the state the resources it needs, especially in times of economic crisis when the cost of subsidies rises.”