Posted on 04/29/2011 7:09:30 AM PDT by SeekAndFind
This morning's Spanish unemployment number was staggeringly high, rising to 21.3% of the population in Q1. But it may be masking two domestic problems the country is about to reform, in an attempt to bring that number down and raise tax revenues.
Spain's government is about to launch a strategy aimed at cutting black market employment, a portion of the economy which makes up a staggering 17-23% of the country's GDP, according to Bloomberg. That puts Spain slightly behind Greece, but on equal terms with Italy.
The problem is these employees are at once avoiding government taxes, getting unemployment benefits, and increasing the unemployment rate. Visually, it makes the economic situation look worse than it really is, while it also damages the government's ability to tame its debt situation.
The plan, which will be announced later today, aims to incentivize people to come clean about their private wages, and stop people from getting full unemployment benefits while they are working privately.
While Spain may have cut more jobs in Q1 2011 then all of 2010, the underground economy may be having a strong impact on this statistic.
(Excerpt) Read more at businessinsider.com ...
” Spain’s government is about to launch a strategy aimed at cutting black market employment, “
That means Secret Police, ‘denounce your neighbor’, good ol’ fashioned totalitarianism....
The Obama Administration will have observers on the scene, taking notes, to see how to do it here....
Don’t blame the people of Spain for wanting to keep the fruits of thier labor.
Bwaahahhahahahaha ..... They (the smarts) don’t learn well (from history), do they?
They think citizens are just going to quietly fall in line with their grand socialist scheme, and too dumb to figure out ways to ‘gin the system’. “If you can’t beat them, join them.” but they forgot there’s always another way out.
>>> The plan … aims to incentivize people to come clean about their private wages, and stop people from getting full unemployment benefits while they are working privately. <<<
Yes, I am dying to know the plan. How are you going to STOP people?
Sounds like people acting like people.
Vamanos Galt.
The point that many people, both within and without government, miss is highlighted by this story.
If taxes get too high, people start finding ways to get around paying them.
Hence, there is a physical limit as to how much a government can successfully collect in taxes from it’s population as a percent of GDP.
The myth that is pushed on everyone else by those who favor tax increases at this point in the U.S. is that they will produce significantly more revenue that the Treasury is already collecting. The myth merely sounds good to people who don’t want to admit the myth is a myth or who don’t understand, or who are just too mentally lazy too think it through.
The underlying problem in the U.S. is simply the control that government (Federal, State and municipal) has usurped from the people which continue to increase personal costs and close off personal opportunity to profit from personal effort. Every year, there are more EEOC, more EPA, more HUD, more of everything in government compliance requirements - just to open the doors of a business and keep the lights on. Big business simply passes those costs through to consumers, while small business gets choked off by them.
Workers will accept cash and not charge the customer the VAT tax of 20%.
Two losses for the govt. - the workers income declaration and the VAT tax collection.
This is what happens when VAT/sales tax rates go too high...
quien es Juan Galt?
The streets of CA are crawling with workers working for cash and avoiding taxes while declaring enough to get govt bene’s.
It is getting worse, because what was once done by only illegals is now done by citizens in order to survive and compete.
Workers with undeclared income are getting earned income tax credit, food stamps, medical etc. All the while taking a job away from a legal worker and reducing pay levels of those working.
“Workers will accept cash and not charge the customer the VAT tax of 20%.”
I don’t see how to do that. If the sellers forgo the VAT, they lose their money, not the government (since 90% of the VAT, 18% or the 20%) is already paid by the seller when he buys his items from the manufacturer. That’s why governments like it so much.
“Workers will accept cash and not charge the customer the VAT tax of 20%.”
I don’t see how to do that. If the sellers forgo the VAT, they lose their money, not the government (since 90% of the VAT, 18% or the 20%) is already paid by the seller when he buys his items from the manufacturer. That’s why governments like it so much.
Perhaps I’m missing something.
I don’t see how to do that. If the sellers forgo the VAT, they lose their money, not the government (since 90% of the VAT, 18% or the 20%) is already paid by the seller when he buys his items from the manufacturer. That’s why governments like it so much.
Perhaps I’m missing something.
I wasn't clear, sorry.
In this case it's workers who perform gardening of construction tasks for homeowners. The value of the tradesman's work is taxed by the VAT.
"I'll lay your brick patio for cash with no VAT added".
“I wasn’t clear, sorry.
In this case it’s workers who perform gardening of construction tasks for homeowners. The value of the tradesman’s work is taxed by the VAT.
“I’ll lay your brick patio for cash with no VAT added”. “
Ok, that make sense, thanks. I agree, trying to apply the VAT manual labor type work is next to impossible - it’s probably not even worth doing. Just covering products will cover a large (probably majority) of commerce.
Politicians tackling the grey economy?
The grey economy is needed to generate what it is known in Spain as “black money”, that is, cash not declared to the authorities, in order, among other things, to bribe politicians.
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