Spain's Small Businesses Demand Further Tax Reforms

 

Family-run businesses are demanding friendly policies from the government, including a better tax regime, more public investment, greater access to credit and deeper reforms to stimulate domestic demand.

"Spain is one of the few exceptions where the forecasts still talk about a contraction in domestic demand in 2014," said José Manuel Entrecanales, president of the family business association Instituto de la Empresa Familiar. (He is perhaps better known as the CEO of Acciona, a major construction and infrastructure group.)

Speaking at an industry meeting in Jerez de la Frontera this week, Entrecanales aimed his comments at Deputy PM Soraya Sáenz de Santamaría, who took the podium right after him but did not veer from the speech she had prepared for the occasion. Instead, Santamaría simply noted that the Rajoy government's priorities include continuing their structural reforms, fiscal consolidation and cleaning up the financial system.

"The government is not going to let up in its reform agenda; the spirit of reform will be with us in the global world," she said. "We have made outstanding efforts in terms of deficit adjustment, but there is always more to be done. Now we need to make progress on fiscal discipline, because it is the key to job creation; because public revenues are crucial to state financing; because we need to reaffirm the principles of efficiency and progressiveness; and because the management system will help businesses better meet their tax obligations."

Santamaría underscored that fiscal reform can't just mean lower tax, in what many construed as a message to Madrid premier Ignacio González, who has announced a tax cut for the region.

Most of the businesspeople who attended the seminar were grateful for the government deputy's words of encouragement, but everyone agreed that "there is always more that can be done." One member of the audience noted that more efficient management is needed. But what emerged from the gathering is that family-run businesses are mostly concerned about taxes.

In his address, Entrecanales warned that business investment requires "a stable fiscal and regulatory framework that is favorable to growth and respectful of legal security and legitimate trust." The head of Acciona criticized the fact that the new government has made more than 50 changes to tax regulations.

"That is why family-run businesses feel the need to once again appeal to the government for a fiscal framework that encourages economic growth and is not subject to constant variations; a framework that does not stifle operating capacity and initiative because of the constant tax hikes," he said.

The president of the family-run business association ended his speech with a personal reflection about the social image of the entrepreneur in Spain. "Too often businesses are viewed as the holders of wealth, rather than its creators; as privileged entities instead of socially useful tools for development and progress."