TAXATION
Among the sources of the national revenue of Spain there are several
which more especially affect the poorer portion of the community, or, by
hampering trade and manufactures, put obstacles in the way of the
national prosperity. Among these may be especially mentioned the Customs
duties, the tax on trades, business, and professions (_contribucion
industrial_) the _octroi_, or _consumo_, the creation and sale of
monopolies, and the national lottery. The total taxation of the country
is absolutely crushing, and makes Spain one of the dearest places of
residence in Europe.
The Customs are excessively high, especially for a country that has
comparatively few manufactures of its own to protect. To take a few
instances at random from the Tariff: Straw hats pay about 20 pesetas per
kilogramme; preserves, 3 pesetas per kilogramme; typewriters, 8 pesetas
per kilogramme; timber in boards, 6 pesetas per cubic metre; materials
of silk and velvet, from 30 pesetas per kilogramme; woollen materials,
from 13 pesetas per kilogramme; drugs at various rates from 36 pesetas
per kilogramme downwards, and so forth. The consequence is seen in the
prices charged in the shops for ordinary commodities. Thus Danish tinned
butter costs pesetas 2.75 per lb.; tapioca, 1 peseta per packet of about
¼ lb.; coffee, pesetas 2.50 to 3 per lb.; Keiller’s marmalade, 3 to 4
pesetas the 1 lb. pot; Burroughs & Welcome’s tabloids, pesetas 2.50 the
small bottle of 25; and most other things in about the same
proportion.[24] The Customs receipts form, with the exception of the tax
on real estate, the largest single item in the Budget. For the year 1909
they were estimated at pesetas 153,600,000 (£6,144,000).
The _Contribucion industrial_ is a tax upon every imaginable trade,
profession, and industry that can be exercised: on merchants,
manufacturers, shopkeepers, professional men of all sorts, on means of
transit, on public entertainments, on schools, newspapers--in short, it
is almost impossible to find any kind of business or occupation that is
not taxed.
The amount of the tax varies with the population, a scale of ten
different rates being drawn up according to the size of the town.
Bankers pay from about £300 a year downwards, according to the place of
residence; merchants from £200; shopkeepers from £70; hotels from £60;
contractors 6 per mil. on their contracts; railways £10 per kilometre
constructed, and a tax on their receipts; brokers from £80; newspapers
from £35; publishers from £25; private schools from £10; and so on. It
is tedious and unnecessary to accumulate instances.[25]
That such a burdensome tax as this necessarily hampers trade and goes to
prevent commercial and industrial development needs no demonstration:
the thing is self-evident. The compiler of the manual of this law says
in his Introduction, with perfect truth, that it has the radical defect
of making heavier demands as the trader’s profits fall, and that the
framers of the law, so far from attempting to harmonise the interests of
the Treasury with those of the taxpayer, thought only how to squeeze
him, so that the tax nips in the bud whatever might aid in the increase
of prosperity or open new fields for the productiveness of the nation.
This tax immediately affects the professional and commercial classes:
the poor, such as street hawkers, journeymen labourers, fishermen, &c.,
are exempt; but indirectly they too suffer, as naturally it helps to
increase the price of necessaries.
The greatest burden on the working classes--and it is a very grievous
one--is the _octroi_, or _consumo_, a heavy tax on nearly every kind of
food, drink, and fuel, and on timber, stone, lime, &c.; in short, on
nearly everything that is consumed in use. The fisherman has to pay
_consumo_ on his catch before he can sell it; the farmer on his dead
meat, poultry, and eggs brought to market; the charcoal-burner on his
charcoal; and so on. The tax, varying in details, is levied in every
town and village, and thus may be, and often is, paid twice over by the
same goods, if they happen to be conveyed from one town to another.
It is obvious that such a tax on the necessaries of life presses with
exceptional severity on the poor, and it is, moreover, steadily rising,
while wages remain stationary. It is usually farmed out to syndicates
which are said, and no doubt with truth, to be making enormous profits
out of it. These syndicates are believed by the people to consist in
many cases of persons who
[Illustration:
A SELLER OF PALM-LEAF BRUSHES AND FANS.
[To face page 289.]
represent the Jesuits, and the oppressiveness of the tax and the steady
rise in its amount form another count in the heavy indictment of the
poor against the Religious Orders. The estimated receipts from this tax
in the Budget for 1909 were pesetas 58,000,000 (about £3,520,000).
“Everything in the country is dying of the _consumos_,” said a working
woman of about sixty years of age, who remembers with regret how much
easier the life of the poor was in the days of Isabel II. “Every four
years the contract for the _consumos_ in our province is put up to
auction, and every time they are sold the price is raised four or five
thousand duros,[26] and _we_ have to pay the difference. Yesterday
Manolo paid four duros _consumo_ for the fish he sold in the market, and
all he had for himself after twenty-four hours’ work was ten reals. The
man who rents the _consumos_ from the Government is rotten with money
(_podrido de dinero_): millions and millions of pesetas he has, all
wrung from the necessities of the poor. Don Alfonso does not like it;
every one knows that. If he had his own way there would be no _consumo_
for the poor. Already since he came into power we have been relieved of
the _consumo_ on wine, green vegetables, and potatoes, and they say that
two years hence, when the contract runs out, he wishes that it shall not
be renewed. But that would not suit the Government nor the Jesuits, who
are mixed up in this business. They would lose too much which they now
are able to put into their own pockets. So they would like to make
another revolution to get rid of Don Alfonso, as they got rid of his
grandmother, before their contract comes to an end. In her time bread
cost just half what it does now, twenty-five eggs cost five reals
(pesetas 1.25) instead of two pesetas a dozen, and for four cuartos we
could buy a piece of pork as big as we get now for two reals.[27] Salt
was free of _consumo_, so was oil, so was cheese, and shell-fish and
chestnuts sold in the street were not taxed, so that they could be
bought for much less than now, and the whole reason is because the
Government lets the taxes instead of taking the trouble to collect them
as was done in the time of Queen Isabella.”
Whether this good lady, whose words I have translated literally from
notes made at the time, was right or wrong in her supposition as to the
interest of the Jesuits in this tax, and as to the quadrennial increase
in the amount paid for it by the syndicate of farmers who exploit it, I
cannot say. I quote her words as an instance of what is said on all
sides by her class whenever the subject is mentioned, and as far as I
can learn she is quite correct in her comparison of the prices of food
now with those of forty years or so ago.
Tobacco and sugar are Government monopolies, farmed out to companies,
which also are popularly believed to be under the control of the
Jesuits. I have never seen any accounts of the profits of the Tobacco
Company, but their shares are quoted at about 390 to 400, which speaks
for itself. The tobacco they supply is very bad, and outrageously dear.
The estimated receipts from this source were pesetas 140,400,000
(£5,616,000).
The sugar trust was created comparatively recently. A short account of
the last annual meeting of the shareholders was published by the Press
in November, 1909, from which it appears that the trust made a profit in
the year, in round figures, of pesetas 8,400,000 on a gross income of
pesetas 14,600,000 (say £336,000 on £584,000), and pays a dividend of 8
per cent. And during the past twelve months the price of sugar has been
rising, and now stands at about 7d. per lb. Figures like these,
relating to a necessary of life which is the one luxury of the poor, do
not require comment, especially in view of the fact that enough cane and
beetroot sugar for the entire needs of the population could be produced
in the country, where both soil and climate are suitable in a great part
of the southern provinces. But one company after another has been
crushed out of existence, and only ruined factories remain to remind the
traveller of what ought to be prosperous undertakings, beneficial to the
whole nation. From this source the State gets pesetas 31,600,000
(£1,264,000).
Matches are another monopoly, also farmed out. They are of course bad
and very dear--½d. or 1d. for fifty matches, according to quality. The
conditions under which the operatives work are, I am told on good
authority, simply deplorable, and growing worse instead of better. The
estimated receipts are pesetas 10,000,000 (£400,000).
A tax which combines a maximum of irritation with a minimum of profit is
one which is levied on the business books of persons engaged in
commerce. Every page of the ledger, cash book, press copy book, &c., has
to be officially stamped at a charge of so much per page: the total
charge for a complete set of commercial books sometimes amounting to 500
pesetas (£20), and not only so, but the Government--presumably in order
to get more out of the tax--prescribes the method by which the merchant
must keep his books. I was told by the manager of a large foreign
industrial concern that he has to employ twice as many clerks as he
needs, solely because the authorities insist on a cumbrous and obsolete
system of book-keeping.
The law enacts that pious foundations which offer their manufactures for
public sale are liable to taxation. It is currently said that this
obligation is evaded. Whether this is the case or not I cannot say from
personal knowledge, but certainly any visitor can purchase sweets or
needlework made in the convents. Indeed, some of them are celebrated for
their confectionery, which is always sold a trifle under the cost of
similar goods made by a lay tradesman.
If the taxes were fairly and honestly collected, their amount could be
materially reduced. But as a matter of fact many are not collected at
all from the persons most able to pay. The tax-collector is usually
willing, for a consideration, to play the part of the unjust steward,
and take less than the proper amount. It is sometimes said that only
fools and foreigners pay the taxes, and cases have occurred in my own
knowledge where bribery in the proper quarter has effected a
substantial reduction in the amount accepted. Every resident in Spain
knows of such instances: the thing is notorious, is talked of quite
openly, and is done with hardly any attempt at concealment. It is
impossible to conjecture what proportion of the total taxes due is thus
informally remitted, but it must be something considerable.
Complaints about evasions of taxation frequently appear in the papers:
thus it was stated as a fact in the _Liberal_ in February, 1910, that
about 45 per cent, of those liable for _Contribution industrial_ evade
payment. In the same newspaper, in the same month, appeared a long
statement, signed by the officials of the Guild of Cab Proprietors in
one of the large towns, accusing certain owners of livery stables, who
let smart carriages for hire, of defrauding the municipality of some
50,000 pesetas (about £2,000) a year by falsifying the declarations on
which they take out their licences, and no attempt was made to show that
the accusation was unfounded. Complaints about evasion of taxation by
large landowners also are of frequent occurrence.
Quite recently the Government has seriously taken up this question of
falsified returns, especially in the case of real estate, and is making
a systematic inspection of the properties liable for taxation. An
immense amount of fraud has already been discovered in the towns, and
the case of the rural estates is probably worse. I was lately told of an
instance where, to my informant’s knowledge, an estate which adjoins his
own has been paying 60 pesetas a year, whereas it should have paid about
2,000. In some parts of the country the large landowners are doing their
utmost to oppose the carrying on of the Ordnance Survey, because the
effect of it would be to define and make public the extent of their
property.
An ingenious mode of defrauding the exchequer of succession duties is
practised on a gigantic scale. This consists in depositing personal
property in the banks in the joint names of all concerned, actual
holders and heirs apparent, to the order of any one of them. Thus on the
death of the father, the owner of the personal estate, it passes to his
son without any legal intervention, and the Treasury is powerless to
collect the succession duties. Under the Spanish law as it now stands,
if one of the owners of such a joint deposit dies, the deposit pays a
proportion of the duties corresponding to the number of names in which
it stands: a half if there are two, a third if there are three, and so
on. In January, 1910, there were “undefined deposits” (_depósitos
indistintos_) as they are called amounting to nearly 519,700,000
pesetas (about £20,788,000) in the Bank of Spain alone, and Alvarado,
Moret’s Minister of Finance, obtained a Royal Decree dealing with these
deposits. His plan was simple: merely to make the joint deposit liable
for the whole duty on the death of any one of those interested. As this
would oblige the owner to pay if the heir died first, it is obvious that
the practice of depositing in joint names would at once come to an end.
But Cobian, Alvarado’s successor in Canalejas’ Ministry, suspended the
decree, a proceeding inexplicable in a Minister whose Chief loudly
proclaims his democratic principles. Meanwhile the depositors took
immediate advantage of the respite afforded them by the suspension of
the decree to transfer some 200,000,000 pesetas (about £8,000,000) to
banks abroad, and most probably a good deal more will go the same way.
The Religious Orders are fighting the decree tooth and nail, because
while legally formed associations, who do not desire to conceal their
capital, do not object to the decree, illegal associations, who have
reasons for secrecy as to their affairs, find in the system of joint
deposits an easy way of escaping their liabilities. It must be
remembered that most of the Religious Orders now established in Spain
are illegal, the Concordat only allowing of two, together with a third
not yet named.
It is always assumed, as a matter of course, that the whole
administration of the country is corrupt. When an unexpected deficit
appears in public accounts, governmental or municipal, when a sum of
money voted for a certain purpose has evidently not been spent as
intended, when, as frequently happens, money owing by the State or the
Municipality is not paid--in short, whenever there is anything in the
national or local administration of the public funds which calls for
explanation, it is taken for granted that some one in office has been
stealing. Whether this assumption is justified or not I do not pretend
to say. All I know is that it is universally made.
I asked a Spaniard on one occasion why a certain public building had
never been finished. “No doubt the Alcalde uses the money to keep up his
carriage,” was the reply. The man certainly did not know the facts, but
this was to him the most plausible explanation. When a few years ago
Admiral Cervera was ordered to fight the United States with ships armed
with obsolete guns and shells that did not fit them, every one said, and
still says, if the subject is spoken of, that officials in the
Government stole the money that ought to have been spent on the Navy.
The system extends, or is said to extend, from the highest ranks of
officialdom downwards, and if this is true, it must necessarily operate
in substantially reducing the total funds available for the Treasury.
A minor matter, which I only mention because, it goes to illustrate once
more the system of over-taxation with no adequate result, is the postal
service. A letter in Spain does not cost a penny, as it does everywhere
else; it costs twopence: of this three-halfpence are paid by the sender
and a halfpenny by the receiver. In exchange for this, the Government
gives a service which is indifferent in the large towns, and infamously
bad in the smaller towns and the rural districts, where there is no
security whatever that any given letter will reach sender or receiver,
and where, to my own knowledge, a very large number are lost.
Gambling in the national lottery, which is drawn about three times a
month, is almost universal, and an immense amount of money must be
wasted on it. I remember seeing a man in a second-class railway
carriage, after borrowing my newspaper to see the result of a drawing,
throw away at least a dozen tickets, representing a cost of either three
or five pesetas each. The lottery is conducted with absolute fairness,
and it might be argued that, as people will gamble, it is better that
they should do so on a straightforward lottery than, _e.g._, on
horse-racing or some other sport of doubtful honesty. On the other hand,
there is no doubt that the fact of these lottery tickets being thrust
under the noses of the public all day long, coupled with the reports
current in conversation and the particulars given in the Press of the
sudden wealth which has accrued to this and the other working man
through a lucky number, must foment the gambling spirit, which is
sufficiently rife in Spain without any such official encouragement. The
estimated net receipts from the lottery for 1909 were pesetas 35,250,000
(£1,410,000).
It must be borne in mind, in connection with the universal venality of
the lower grades of the bureaucracy, that a certain amount of excuse is
to be found in the salaries they receive, which are miserably small in
amount and often in arrears. When a man has to keep himself and his
family on two pesetas a day, it is not surprising that he takes
advantage of the opportunities which his official position gives him to
increase by illicit means a wage on which it is quite impossible that he
should live decently and honestly.
THE PROCESS OF REGENERATION