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Spanish report
by Euro Reporter
2014-02-11 12:59:22
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Spain's Princess Cristina in court over corruption case

Spain's Princess Cristina has been questioned in court in connection with a corruption scandal involving her husband's business dealings. It was the first time in history that a member of Spain's royal family has appeared in court as the subject of a criminal investigation. Her husband Inaki Urdangarin is alleged to have defrauded regional governments of millions of euros of public money.  The princess and her husband deny any wrongdoing, and have not been charged. Spain's royal household admits the case has damaged the reputation and credibility of Spain's royals, and, partly because of this scandal, the popularity of King Juan Carlos has fallen in recent years.  

spain_400Hundreds of protesters chanting republican and anti-corruption slogans demonstrated near the court. Princess Cristina, 48, stepped from her car and walked into the court on the island of Mallorca without commenting to the waiting television crews. King Juan Carlos's youngest daughter then faced a judge to answer questions relating to alleged fraud and money-laundering. The proceedings were closed to journalists, but Manuel Delgado, one of the lawyers involved in the case, said the princess appeared calm and well-prepared. "She is exercising her right not to give answers that would compromise her," he told reporters. "She is not diverging from the script we expected: she does not know, she does not answer and that's it."

The allegations relate to a supposedly not-for-profit organisation called Noos, of which Inaki Urdangarin was president. The foundation staged a series of sporting events for the regional governments of the Balearic Islands and Valencia. Mr Urdangarin is accused of organising the events at hugely inflated prices. With a former business partner, he is alleged to have received a total of 5.6m euros (£4.6m; $7.5m) in public money. Princess Cristina is suspected of spending some of that money on personal expenses.  There are also questions about what Princess Cristina knew about the alleged wrongdoing of her husband. Her lawyer has said she is innocent.


Spain plans overhaul of tax system as Rajoy eyes election

Spain is planning a sweeping reform of its inefficient tax system, in a move that Madrid hopes will shore up the country’s economic recovery and bolster the government’s chances of re-election next year. The overhaul of the tax regime will mark the last big structural reform effort made by the government of Mariano Rajoy, prime minister, and follows earlier moves to reform both the labour market and the pension system. It comes at a time of renewed market confidence in the Spanish economy, which has seen a surge in foreign investors buying into both sovereign bonds and the Madrid stock market. Spain emerged from recession last year but continues to suffer from towering levels of debt and unemployment. Details of the tax plan have yet to be finalised, but Madrid has made clear it wants to simplify the system and make tax collection more efficient. At the heart of the overhaul will be an election-friendly move to lower marginal rates on income and corporate tax. The headline reductions will be balanced by steps to broaden the tax base, mostly by eliminating some of the exemptions and deductions that currently litter the system. “In Spain we have a system with high nominal rates but we collect only a small amount of taxes in relation to our gross domestic product and the overall wealth of the country. There is a problem with efficiency in the system. Fraud is an issue but it is also about the way the system works,” Cristóbal Montoro, Spain’s budget minister, said.

He pledged to “improve tax revenues while lowering tax rates. We want to have a fiscal system that makes it more attractive to invest and makes the country more competitive”. The overhaul will begin this month, with the unveiling of a reform plan drawn up by a government-appointed panel of experts. Officials say the reform should be completed and passed by parliament by the summer to come into force next year. This makes it likely that tax reform will play a crucial part in the general election slated for late 2015. In Spain we have a system with high nominal tax rates but we collect only a small amount of taxes in relation to our gross domestic product Economists and tax experts have long called for an overhaul of Spain’s cumbersome tax regime, which combines some of the highest rates in Europe with one of the lowest tax takes in the region. The official corporate tax rate, for example, stands at 30 per cent but a multitude of tax breaks, most notably on interest payments, means that large companies based in Spain in effect pay a rate of 8 per cent. Spain’s tax take has held up especially poorly during the recent crisis, according to data from Fedea, a Madrid-based think-tank. It found that tax revenue fell from 41 per cent of GDP in 2007 to 37 per cent in 2012. Countries such as Italy and France, in contrast, saw tax revenues as a percentage of GDP rise over the same period.

On average, EU member states collect taxes equivalent to more than 45 per cent of GDP – a crucial difference at a time when Spain is seeking to bring its wayward deficit back into line. “Spain has a hole of more than €40bn in its budget and if the country does not solve this problem soon debt is going to explode,” said Juan Rubio-Ramírez, professor of economics at Duke University in North Carolina. Mr Montoro said that while he expected the tax reform itself to be revenue-neutral for the government, the country’s total tax take would increase owing to the higher growth and consumption that followed. He also said he would oppose any proposal to raise the top rate of value added tax, currently at 21 per cent, even though Spain collects less VAT as a share of GDP than any other leading eurozone economy.  “I think we have [VAT] rates that are pretty high and what we have to do is raise more with the same rates,” he added, pointing to the projected pick-up in consumption this year. One particular sensitive issue is the discounted rate of VAT applied to hotels and other businesses in Spain’s tourism sector. Lifting the current rate of 10 per cent would most likely boost tax revenues sharply, but Mr Montoro insisted he had no intention of imposing an additional burden on one of the country’s most important – and politically influential – sectors. “The first industry in the country is tourism. People come here for many reasons but also for the price,” he said.


All hail Pedro J Ramírez, Spain's crown prince of muckraking

You'll remember the investigative wizard Seymour Hersh's terse definition of great journalism: "making trouble". By these lights, Pedro J Ramirez is probably the greatest Spanish (and European) journalist of the past 25 years, after he founded El Mundo in Madrid, then made it the nation's second-largest daily through years of blistering scoops and passionate invective – and prickly contempt for the gentilities of fairness and balance. But (rather like Kevin Pietersen's Test career) now it's over. Falling sales, or government pressure, got him in the end.

Corruption, corruption … from terror plots to standard dirty dealing, Pedro J never stopped digging. Was he an enemy of Spain's socialists and so, indelibly, uncomfortably, a man of the right? It was always a good question through the early 1990s as El Mundo's reputation grew. Events and reactions supplied the best answer. No: Pedro wasn't some predictable party hack. Give him a scandal that stank and he'd expose whoever and whatever needed exposing.

An edgy business? Of course: investigations this incendiary operate on the edge. An approach that leaves him with many enemies in high places and too few friends? So it would seem. But in the UK these days we're holding memorials for WT Stead, the first monarch of muckraking. Pause, then, keep up the royal metaphors – and salute Spain's crown prince.



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