Taxes, as the Constitution states, are the technical instrument necessary to cover public spending. The main action undertaken by the Government therefore has to be focused on spending, or even better, on the management of it. This is necessary because the level of revenue needed by a State depends on its level of spending, and obviously, on the level of wealth that a country is able to generate.
Every badly managed cent of a Euro leads to taxes that lack constitutional legitimacy. And this is why it is important to accentuate wherever necessary. In spite of this, we remain obsessed with increasing taxes that would not exist if there weren’t any spending policies to cover or public investments to finance.
But it is even more important to realize that taxes must let us aspire to a fairer society. And to do that, it is necessary to accentuate especially in the education and culture of tax, an education to which the examples of high standing social, economic and political people and institutions play a big part.
There is no doubt that a comprehensive review of our tax system is needed. But more important than that is to define the model of the State that we want, or rather, that we can afford, and the financing of it. This is very modestly, the debate which we must focus on.
It is clear though, that we still do not know the truth surrounding spending: we ignore if its management is optimum, what ratio of productivity per civil servant we have, or which duplications we can eliminate. We still do not consider that before asking for sacrifices, we have to make sacrifices ourselves, look in the mirror, and with humility, realism, and bravery, reconsider all that needs reconsideration. In short, raise questions on everything. It seems strange that while our companies are asked to calculate and submit their Yearly Accounts, are obliged in some cases to audit them, must anticipate the responsibility of their administrators, are condemned to comply to a nightmare of formal obligations, and a never-ending amount of rules, our different Public Administrations on the other hand, are not required to carry out similar obligations. Although it may seem incomprehensible, their accounts are not subjected to any external auditing, nobody is made responsible for budget deviations, nobody other than the Administration reviews things objectively, independently, and with business criteria towards the quality, efficiency, and effectiveness of spending, nobody informs us whether each item of the expenditure is necessary nor of loss-making services, and there is no type of mechanism to demand responsibility for the inadequate management of spending.
Ultimately, spending, which seems to be the origin of all evil, must be prioritized, the public must be convinced of the road to take, and then, only then, address the reform our tax system needs.
The obligation to pay taxes is just as important as the moral legitimacy to demand them.
Antoni Duran-Sindreu Buxadé
Director of Tax System Programmes, Barcelona School of Management