Inflation and taxes: This is how Sánchez impoverishes the middle class

Vice President Calviño says that “inflation is not worrisome because it derives from growth” and Sánchez repeats that we are experiencing a “fairer recovery.” Both claims are false.

Increase? Spain’s GDP is still 7% below pre-crisis levels and that which has been inflated via public spending and the largest debt issue in years. Despite unprecedented support from the European Union and the ECB, the Government will leave Spain in 2023 with worse fiscal and labor data and much more indebted than in 2018.

Recovery? Bouncing is not growing.

Evictions from first homes of natural persons increased 242.8% in the annual rate, reaching a maximum of four years.

The Bank of Spain estimates that 25% of companies are insolvent. Even more worrying, the number of large companies that are in this situation is 15.3%.

The cost per hour worked decreased 3.8% in the annual rate in the second quarter. Furthermore, the wage cost registers an annual variation of –2.5% with 15 sectors showing negative evolution and only three positive ones, according to the INE.

We only have 19.47 million affiliated with Social Security in August despite unprecedented momentum from the reopening and fiscal and monetary support from Europe. A drop of 118,000 compared to the month of July. Furthermore, there are still 280,000 workers at ERTE. That means that the real affiliation is 19.2 million workers. We still do not recover levels from 2019.

And that the unemployment figures are disguised with a increase of more than 10% per year in the workforce of public employees despite the fact that the state deficit is out of control and will exceed 8% in 2021 after 10.8% in 2020. And, let’s not forget that almost 300,000 jobs were destroyed on August 31. A figure much higher than the last day of August 2019 and earlier.

During the first seven months of 2021 total spending by international tourists decreases 23.2% compared to the same period of the previous year, in the middle of the pandemic.

We have more unemployment, more debt, less wages, higher taxes and more inflation. The recovery is neither solid, nor fair, much less a reflection of growth, which is nothing more than a rebound in debt and fragile.

Inflation, the tax on the poor especially affects the middle classes. Official inflation stands at 3.3%. This means that in Spain all sectors have lost purchasing power of their salaries – those that work – between inflation and taxes. But it is that the components are much more worrying. The costs of essential goods and services soar well above the official CPI.

Inflation is not a fluke. It is a policy. It has been aggressively sought out and cheered by political power, especially by the so-called Social Democrats, disproportionately increasing the money supply in 2020 well above the demand for currency. It is not by chance that the prices of goods that are widely available rise as much as those most subject to geopolitical ups and downs. Inflation is always and everywhere a monetary effect. More money going to captive or scarce assets.

The The middle class in Spain is being especially punished since the arrival to power of Sánchez. First they have raised taxes on savings, consumption and hiring and in a few weeks they will raise taxes on employees again by increasing the minimum contribution bases. To this must be added the erosion of the purchasing power of wages and savings due to inflation, the tax on the poor.

Many will say that this would have been the same with a liberal center government, and it is false. The Government is the one that fixed the most expensive sections of the rate in history in the hours of greatest demand. The Government is the one that has increased all indirect taxes and hiring while families and companies suffered, and it has been the government that has shot up political spending and advisers while SMEs, freelancers and families suffered another brutal crisis.

Furthermore, we cannot forget that the Government benefits from debt inflation (it slightly “dilutes” its debt) and, above all, by collecting more from indirect taxes.

If you believe that a socialist government is going to reduce prices, you are very wrong. The inflation tax and fiscal voracity are essential elements of the socialist strategy of quiet expropriation of the economy. The only thing they do is blame the prices on others, but they have been the ones who have most cheered the inflationary monetary policy and the ones who have benefited the most from the hidden tax that is the price of CO2 on electricity.

Let’s not forget that This Government is going to collect 2,300 million euros from the sale of emission rights, 11,000 million euros in total of the rate and expects to have a record year of tax collection led by indirect and labor taxes. Do you really think that someone who benefits from rising prices is going to lower prices?

The problem is that the The recovery model that the Government has opted for is extractive and confiscatory and especially impoverishing for the middle class, which is the one that suffers the double inflationary and fiscal burden the hardest.

That is why in his manifesto the PSOE asks for more money printing and debt monetization (plus inflation) and refuses to reduce duplication and unnecessary spending. Because the weight of the public sector increases in the first phase (monetize the deficit and inflate public spending) and in the second (raise taxes and let inflation rise).

That is why a center and liberal party must put itself in the antipodes of the socialist extractive policy. Because it is the general impoverishment of the population for the benefit of the bureaucracy.

No, this is not the only way to get out of the crisis and it certainly has nothing to do with fairness. We must reduce the tax burden on companies and families and lighten unnecessary spending in addition to defending a monetary policy that does not encourage excess debt and public risk while eroding the purchasing power of the currency. And you have to do it before let’s face a lost decade.

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