ATTITUDES TO TAX, DELAY, OFFICIALDOM AND LAW

While history, government and Spain’s institutions set a framework, some tolerance has to be made for flaws in any system. Having seen their homeland change rapidly from a war torn dictatorship to a thriving, democratic and successful part of the EU in a period of 70 years, how has this left Spain’s citizens? Pacifist and abhorrent of war! Tolerant of most things! Proud and hard working! And their attitude to authority? To be dealt with patiently, respectfully and anticipating delay. In many ways the Spanish character is at ease with defects found in their legal system. All these facets affect a Spaniard’s way of behaving for they will interpret the law according to their own perception. If their perception is of delay, bureaucracy and avoidance then that is precisely how they will respond.

Tax – to pay or not to pay

The first step towards a unified tax system was taken in 1977. A few months after the first general election the Finance Minister steered through the Cortes an elementary tax reform law. It unified a system of income tax so that wage earners and non-wage earners were assessed according to the same rules. For the first time tax evasion was made an offence.

The next step was to increase the number of people who had to fill in tax returns. In 1980, for the first time, anyone who earned more than a certain amount, or who owned a house worth more than a certain amount, or a car of less than a certain age, or who employed more than one servant, or had a seat on a board of directors, had to fill in a tax return.

In 1990 the government appeared to recognise the limits of its ability to clamp down on evasion when it offered an amnesty. Tax-dodgers were given a choice between declaring their black money free of the threat of a penalty, or investing it in a new series of special, low-interest government securities. The move brought to light 1,700 billion pesetas. The share of fiscal revenue in gross domestic product reached 34 per cent, a 13 per cent improvement on 1977 but still below a European average of 39 per cent.

Tax evasion however, by those who have the opportunity to practise it, is still rife today. According to a study a third of the income earned in Spain is undeclared. It is still common for companies to keep two sets of accounts. The President of the Spanish employers’ federation described evasion as an ‘entrepreneurial necessity’. As for taxes on the buying and selling of property, it is thought that on average parties to a transaction declare about two-thirds of the real price when a house is new, and only a half if it is not.

The government’s failure to curb these abuses, and the Haciendia (income tax office) turning a blind eye to ‘black money’, explains why the poorest contribute a disproportionate amount of tax as it comes from those who do not have the opportunity to fiddle: the country’s wage and salary earners who have tax deducted at source. More importantly it makes a statement that, within reason, income tax avoidance is accepted and tolerated.

Disrespect through delay and cost

While no one disputes the validity of Spanish law and fairness of its judicial system, many question the innumerable delays which inevitably cause social issues far beyond mere frustration. In 1983 more than 80 people died in a fire at a Madrid disco but it took ten years for the case to reach trial. In 1982 a dam burst in the east of Spain, damaging or destroying the property of almost 25,000 people, but it was not until 1993 that any of the victims received compensation. In 1981 adulterated cooking oil killed more than 600 people and afflicted another 25,000. The main hearing was held in 1989, but the cases against senior government officials accused of negligence took many more years to resolve.

The most unacceptable result of delay in a legal system is the disrespect it breeds for the law itself. Ignore planning regulations, fail to pay a fine, debt or rent and there is a very good chance of getting away with it, because the other party will find it is not worth the time or effort of pursuing the issue. Better to settle out of court, or drop the case because it will take so long.

And there is the cost! Nobody pays a parking fine. The chances of a council pursuing the issue through the courts to the point where the individual will pay are slight. It is far more sensible to throw the ticket in the nearest bin and forget about it. Hence the double and triple parked cars which line busy streets, cars parked on pavements, cars parked everywhere. This ultimately leads to tolerant policing.

Look at beautiful stretches of the Spanish coastline or rolling hillsides and you will find dozens of properties that no planning officer has approved. By the time the council had obtained an injunction, the work was done. And since no one has the heart to order a demolition, especially if the owner wields some influence in the area, the most that is likely to happen is that he or she will have to pay a fine. The length and breadth of Spain there are hundreds of homes, blocks of flats or even urbanisations which nobody has ever agreed should be there.

The bottle neck in judicial machinery has given birth to a Spaniard who is an opportunist, living off their wits, one step ahead of their creditors. It is easily done. Sign a contract for a one-year rental for an apartment and then don’t pay the rent. Let the owners go to court to regain their property and get their lost rent. When the going gets hot, move on and do it all over again. Knowledgeable perpetrators of fraud ask the question ‘So what are you going to do then, sue me?’ Sometimes it may be better to deal with the matter personally, such as changing locks on an apartment door and depositing personal possessions on the pavement. No one wishes to disobey the law but sometimes it is expedient to deal with justice personally, which is exactly what a judicial system is designed to avoid.

Breeding avoidance

While it is not necessary to obtain permission to wallpaper a room, Spanish officialdom can be all pervasive. When something has to be done, approved or achieved it usually follows a standard pattern – fill in a form and get it approved. It all takes time.

First, there is a queue for the application form. Then a queue to hand it in, only to find the application is not valid unless accompanied by two other documents which can only be obtained from other departments in different parts of town. Once obtained queue again only to discover that the application will not take effect until stamped by the head of department and he has gone home for the day.

The whole process is made more difficult by the opening hours of the little grilles behind which Spanish bureaucrats confront their public. Not only can the opening hours vary from department to department, but they are always as short as possible. Then there are the fiestas, local and national holidays! Anything of importance could take weeks or months.

What does this achieve? It breeds avoidance. Rather than stand in a long queue – let’s not bother. Rather than go through a long planning application – let’s just get on with the job. Hopefully the reputation of Spanish officialdom may be historic as things are now changing fast, with many services highly computerised. Consequently it soon may not be possible for Spain’s citizens to hide behind the suffocating blanket of bureaucracy.

A blind eye from Councils and Comunidades

Let’s move forward to 2005. Spain’s new Socialist government has vowed to demolish illegally built houses and hotels in an attempt to preserve the parts of its coastline that remain unspoilt. Determined to prevent the Costas from disappearing entirely beneath concrete, a raft of measures was announced to protect the country’s 8,000-mile coastline. Chief among them is a commitment to enforce a 1988 law that banned the construction of any building within 100 metres of the shore and which is conveniently ignored by local planning authorities. This initiative would guarantee public access to the entire coast, its recovery and transformation in spoilt and built-up areas. The government appears to have been spurred into action by a series of reports decrying the toll taken by excessive development. One study claimed that unchecked construction of hotels, houses and marinas, but approved by local authorities, had helped to blight 90 per cent of the coast.

Land law

Concern has also been growing over the effects of a controversial land law in the Valencia region, which has not only fuelled overdevelopment but has financially crippled thousands of homeowners, including many Britons. The law, known as La Ley Reguladora de la Actividad Urbanistica, was introduced in 1994, ostensibly to regulate the acquisition and development of land and prevent excessive speculation.

However, a report by the European Parliament stated it had been misused by unscrupulous developers to force homeowners to sell their homes at well below market prices, or to make them pay excessive sums towards the cost of local infrastructure. ‘There is no doubt that the application of the land law has led to a serious abuse of the most elementary rights of many thousands of European citizens, either by design or by deceit,’ the report concluded. ‘They have had their land and their homes expropriated, and had to pay for the experience, finding themselves in a surreal legal environment without any proper recourse to legal justice.’

Bewilderment

A citizen of Spain is subject to laws set at European, national and regional level. So too are many countries but in decentralised Spain they may be applied, interpreted, or ignored at all these levels. They may be applied to the letter or with latitude, depending who is involved. All this creates law and an application of law as two different things.

Bewilderment is created for a new foreigner who has to tread carefully in a country where he or she does not understand its attitudes. Accustomed to a more formal and stricter application of regulations in northern Europe they are lost in the informal ‘ducking and diving’ that takes place in Spain.

Spaniards themselves take to this fluidity like ducks to water, knowing all the ins and outs, not hesitating to take full advantage of any loophole offered. It is their way of life, quite a natural thing to do, a lifestyle characteristic.

The two cultures often meet when completing a commercial transaction such as building a house. One side is accustomed to formality, order and trust, the other is bred on informality, latitude and taking a degree of advantage. In order to bring the two cultures together books like this are written, always advising foreigners to check, tie things down in writing and if in doubt check again, not with friends who may be unintentionally wrong, but with an unbiased abogado (lawyer).

RECENT LAW

It is not necessary to understand the Spanish Civil Code or for that matter the Constitution – that is now the role of the judiciary – but on the other hand there is one recent law of interest, the Ley de Derechos y Libertades de los Extranjeros en Espana (Law for the Rights and Freedoms of Foreigners in Spain). This law first appeared in 1985, was changed in 2000 and modified one year later. It is of particular interest to a foreigner living in Spain, many clauses influencing the contents of this book.

Two factors impinge on Spain’s treatment of foreigners. The first is the requirement of free movement of citizens within the EU and the second is a contrary pressure on how to deal with the massive influx of illegal immigrants from North Africa. How is this done? The law has now greatly simplified procedures for allowing EU citizens to settle and work in Spain, so much so that new residents enjoy equal rights to Spaniards. And the Moroccans? Periodic amnesties have been granted to legalise their situation, enabling them to obtain work permits together with access to health care services.