Tribune, Cinco Días National Newspaper, Tuesday, December 2.
The recent Spain 2018 report, presented by the Business Council for Competitiveness (CEC) and which has attracted considerable public interest, confirms some measures that the Spanish Association of Personal Services (AESP) has been advocating for some time to boost employment in Spain and bring part of the underground economy to light.
This report highlights the need to implement a series of reforms to improve Spain’s competitiveness. One of the measures it proposes is to “encourage the transition from informality to formality” by reducing the appeal of the underground economy for both workers and employers.
Other countries have achieved this objective by introducing measures to reduce the tax burden on lower-income workers, using service vouchers as a means of payment while subsidizing the cost of certain types of employment, and simplifying the formal-economy hiring process.
Very recently, at AESP’s suggestion, the Spanish Confederation of Business Organizations (CEOE) sent parliamentary group spokespersons a series of proposed amendments, in line with the CEC’s recommendations, aimed at promoting the development of personal services through highly effective job-creation measures, so that they could be taken into account during the parliamentary processing of the bills reforming personal income tax and value-added tax.
Both bills have now completed their passage through the Senate, but the Government has the opportunity to use the parliamentary processing of the 2015 General State Budget to give the economy a boost by introducing a series of tax breaks and deductions that would make personal services cost the same when provided legally as they do in the underground economy. We are referring to personal income tax deductions for individuals who properly document that they have contracted these services (of course, subject to the limit established by regulation), and corporate tax breaks for companies that provide such services to their customers, employees, or their employees’ family members. In 2005, France passed the well-known Borloo Law, which enabled the personal services sector to develop with spectacular results: 400,000 regulated jobs in two years and a significant reduction in the underground economy.
Today’s society has a range of essential needs that must be met. We know them as personal services: childcare, educational support, home care, care for the sick and elderly, and the entire range of services related to the daily lives of individuals and families, helping to improve their quality of life and achieve effective work-life balance.
The employment opportunities in this sector are enormous. Our studies indicate that approximately half a million new jobs could be created over the next three years.
However, the employment-generating capacity of this personal services sector faces a very significant obstacle: many people choose to use the underground economy to meet these family needs and thereby reduce costs, which causes countless disadvantages for families and for the people who perform this work. The benefits that personal services can offer in terms of job creation and bringing undeclared employment to light will only be possible if this situation is corrected. The important thing is that when someone wants to hire another person, either directly or through a company specializing in these services, it should cost the same in the formal economy as in the underground economy and, therefore, they should choose to do so legally. To achieve this, AESP fully agrees with the CEC and the CEOE on the need for tax breaks for individuals and companies specializing in providing these services. In this way, we would ensure that people do not turn to the informal economy to meet these needs.
Spain cannot afford to forgo a sector with such capacity to generate employment and bring the underground economy to light. And all this without reducing public revenue—in fact, quite the opposite.
PDF link
Source
The underground economy and its solutions
Tribune, Cinco Días National Newspaper, Tuesday, December 2.
The recent Spain 2018 report, presented by the Business Council for Competitiveness (CEC) and which has attracted considerable public interest, confirms some measures that the Spanish Association of Personal Services (AESP) has been advocating for some time to boost employment in Spain and bring part of the underground economy to light.
This report highlights the need to implement a series of reforms to improve Spain’s competitiveness. One of the measures it proposes is to “encourage the transition from informality to formality” by reducing the appeal of the underground economy for both workers and employers.
Other countries have achieved this objective by introducing measures to reduce the tax burden on lower-income workers, using service vouchers as a means of payment while subsidizing the cost of certain types of employment, and simplifying the formal-economy hiring process.
Very recently, at AESP’s suggestion, the Spanish Confederation of Business Organizations (CEOE) sent parliamentary group spokespersons a series of proposed amendments, in line with the CEC’s recommendations, aimed at promoting the development of personal services through highly effective job-creation measures, so that they could be taken into account during the parliamentary processing of the bills reforming personal income tax and value-added tax.
Both bills have now completed their passage through the Senate, but the Government has the opportunity to use the parliamentary processing of the 2015 General State Budget to give the economy a boost by introducing a series of tax breaks and deductions that would make personal services cost the same when provided legally as they do in the underground economy. We are referring to personal income tax deductions for individuals who properly document that they have contracted these services (of course, subject to the limit established by regulation), and corporate tax breaks for companies that provide such services to their customers, employees, or their employees’ family members. In 2005, France passed the well-known Borloo Law, which enabled the personal services sector to develop with spectacular results: 400,000 regulated jobs in two years and a significant reduction in the underground economy.
Today’s society has a range of essential needs that must be met. We know them as personal services: childcare, educational support, home care, care for the sick and elderly, and the entire range of services related to the daily lives of individuals and families, helping to improve their quality of life and achieve effective work-life balance.
The employment opportunities in this sector are enormous. Our studies indicate that approximately half a million new jobs could be created over the next three years.
However, the employment-generating capacity of this personal services sector faces a very significant obstacle: many people choose to use the underground economy to meet these family needs and thereby reduce costs, which causes countless disadvantages for families and for the people who perform this work. The benefits that personal services can offer in terms of job creation and bringing undeclared employment to light will only be possible if this situation is corrected. The important thing is that when someone wants to hire another person, either directly or through a company specializing in these services, it should cost the same in the formal economy as in the underground economy and, therefore, they should choose to do so legally. To achieve this, AESP fully agrees with the CEC and the CEOE on the need for tax breaks for individuals and companies specializing in providing these services. In this way, we would ensure that people do not turn to the informal economy to meet these needs.
Spain cannot afford to forgo a sector with such capacity to generate employment and bring the underground economy to light. And all this without reducing public revenue—in fact, quite the opposite.
PDF link
Source
