Spain’s indebted cities target dog-lovers, fortune-tellers for cash

Spain’s indebted cities target dog-lovers, fortune-tellers for cash

12:52pm EDT

By Clare Kane

MADRID (Reuters) – Beggars, dog-lovers and fortune-tellers who venture onto Madrid’s busy streets may soon find themselves out of pocket as authorities in the city and elsewhere seek creative solutions to their financial problems. The Madrid council laid out plans this week to levy fines of 750 euros ($1,000) for public activities including soliciting for money outside shopping centers, feeding or washing dogs, reading tarot cards and performing acrobatics with a bike.Saddled with huge debts since a property bubble burst in 2008, Spain’s autonomous regions and town halls have seen core revenues fall as unemployment holds stubbornly above 25 percent and corporate investments dry up. Many owe millions to service suppliers and staff.

Since last year, several have sought new ways of making up the shortfall, introducing taxes on plastic shopping bags, gambling and tourist stays, or fines for skateboarding, letting off fireworks or drinking or offering massages on the street.

The strategy looks to be paying off, with revenues for the 17 regions, including metropolitan Madrid, up 25 percent last year at 168 billion euros as direct and indirect taxes rose.

Their income is forecast to grow through 2016 – also good news for the federal government, which spent 70 billion euros in 2012 and 2013 bailing out regional authorities and town halls.

Local governments heaped up debt during the property boom, when they enjoyed buoyant investment and high tax revenues as construction companies scrambled to build across the country.

“There was a tax that worked very well for many years and gave town halls a lot of money and that was the construction tax… That’s where there’s a hole,” said Javier Suarez, a tax professor at the University of Oviedo.

CRIMINALIZING POVERTY?

But the new fines and levies have their critics.

Spain’s sky-high unemployment rate has increased the number of homeless on Madrid’s streets, as well as hawkers and beggars, who the proposed penalties in the city would target.

The town hall also proposed a fine for camping in the central Puerta del Sol square, where Spain’s “Indignados” movement took off and inspired similar “Occupy” protest movements around the world.

“The strategy of criminalizing poverty has always produced results but it’s ugly,” said Jesus Sandin, head of the homelessness program at non-profit group Solidarios.

“We’re talking about blaming people who have no other option than to use public spaces because they don’t have housing or work for the deterioration of a city that just a moment ago was aiming to host the Olympics, which is a little unfair.”

Spain’s No. 3 city Valencia – left with a major financial hangover after a huge spending spree last decade – expects to take in around 9.5 million euros in fines in 2013, slightly more than in 2012.

In March at Valencia’s annual “Fallas” festival featuring processions of huge papier-mâché figures that are later burned, officials introduced a 300 euro fine for children under the age of eight caught throwing firecrackers, according to local media.

Parents were outraged last year when some regions charged children who brought packed lunches to school, even if they did not eat cafeteria food. As the economic crisis has eaten into family budgets, many were trying to save by sending their children to school with home-made meals.

TAX ON SERVICES

The new proposals in Madrid, which has promised to cut local taxes from 2015, could come into effect later this year. They also include a penalty of up to 3,000 euros for placing flowerpots in precarious positions on balconies.

Dolores Navarro, city councilor for families, social services and civil participation, said the fines aimed to make the capital more liveable rather than simply raise money.

“Any law or regulation has to have some kind of sanction … People do not learn without some type of punishment,” she said.

In the southern city of Seville, the local government has frozen taxes while introducing new charges for public services, including a 12 euro fee to enter the historic alcazar, a royal palace that was originally a Moorish fort, at night.

“There’s a fair bit of margin in charging for services, because right now lots of services are subsidized by town halls without good reason,” said the University of Oviedo’s Suarez.

Not even death merits exemptions. Burial costs have risen in several cities and the town hall in Zaragoza jacked up maintenance fees for mausoleums to 123.30 euros from just 34.65.