ELA demands an urgent tax reform to ensure that companies contribute at least 25% of their profits to the Corporations Tax

Jun 07, 2022
Mitxel Lakuntza, General Secretary of ELA, and Mikel Noval (Head of the Studies Department) have set forth the need for the urgent passing of a tax reform to raise the taxes on capital and high incomes. Likewise, they have presented the latest report on Taxation carried out by the trade union.

 

ELA affirms that the Basque Government, the Deputations of Araba, Bizkaia and Gipuzkoa and the Government of Navarra are applying the same recipes as Ayuso or Feijóo, refusing to open up any debates regarding taxation, which are occurring all over the world to increase taxes on capital and high incomes. Therefore, Lakuntza has indicated that “companies have to pay at least 25% of their profits in Corporation Tax. Today we are a long way from this, as here they only pay 7.3%. Applying this proposal would mean collecting another 2,300 million euros in the ACBC and an extra 1,200 million in Navarra, which would allow the budgets for Health, Education, Housing, Care, Eco-social Transition, to be increased significantly, as well as social benefits.”

Mikel Noval showed the rest of ELA’s proposals on taxation, to eliminate the structural deficit with respect to the European Union. “The data is clear: the tax collection level in relation to the wealth produced, that is to say, the tax burden, is way below the European average. In the ACBC, the collection for all taxes and social contributions is 33.7% of the GDP; in Navarra, it is 31.6%; and the European average is 40.2%. To equal the tax burden to the European average another 4,640 million euros would have to be collected in the ACBC and an extra 1,746 million in Navarra.”

Noval has recalled that there is a very high level of tax fraud in the non-salary income. “In this field, there have been no decent improvements. Once and for all, all the non-salary incomes should be inspected, because the lack of inspection motivates fraud.” Additionally, the regulation must be changed to oblige the companies to declare their income in the place where it is made, eliminating the possibilities offered by tax engineering. In the same way, the Personal Income Tax must be modified to increase the tax rates for the high incomes, increase the tax bands and eliminate the rate that is applied to income from savings, which is much lower and to guarantee that the tax is not going to be raised for not compensating inflation or the Wealth Tax (modifying the rate to, amongst other steps, double the rate; establishing a specific surcharge between 1 and 10%).

Lastly, Lakuntza denounced the fact that the politicians from the Deputations, from the Basque Government or from the Navarra Government are trying to hide the debate opened around the world about the need to increase capital taxes. “A clear example is what is happening with the energy companies, which are obtaining some very high profits. In different places, the establishment of a surcharge is being set forth on excessive profits. Instead of this, our governors spend their time sweetening the pill for the directors of the oil or electric companies, such as Josu Jon Imaz or Ignacio Sánchez Galán, who are the ones who tell them what they have to do.”

Instead of rising taxes on capital, as is being set forth even by the IMF, here they are doing the opposite, lowering taxes. In practice, this tax policy is much more in line with what Ayuso or Feijóo are planning, with dire consequences for social rights and public services,” the General Secretary of ELA concludes.

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