Less Tax Improvisation: What Businesses Need from Economic Policy

Whenever the economic debate heats up, the conversation turns on the same question: will taxes go up or down? I think it is the wrong question, or at least an incomplete one. My thesis, after years of working closely with the accounts of small businesses, is this: what hurts a Spanish freelancer or SME most is not so much the tax rate as the instability of the rules. A mediocre but stable rule can be planned around; a shifting one, however generous, cannot.

Uncertainty Is Also a Cost

Whoever runs a small business does not have a tax department. They have an adviser, sometimes not even that, and a great deal of operational work. Every change to a regime, every last-minute extension, every incentive that is born with an expiry date forces them to reconfigure their invoicing, review their management software and recalculate whether an investment still pays off. That time and that doubt appear in no economic impact assessment, but they are paid for all the same.

Business organisations, including the economics and taxation committees of the major employers’ associations, have long been calling for something that seems like common sense: legal certainty, simplification and a framework that does not change with every political cycle. I share the diagnosis, with one caveat: this is not a demand made on behalf of large companies. Large companies absorb change with specialised teams. The ones who really suffer from it are the neighbourhood shop, the self-employed professional and the family-run SME.

Simplifying Is Not Lowering the Bar

There is a certain distrust of the word “simplification”, as if it were a euphemism for laxity. It is not. A complex system does not collect better; it generates more good-faith errors, more regularisations and more litigation, and it favours those who can afford good advice. Complexity, paradoxically, is regressive.

I am thinking of very specific issues: the proliferation of formal obligations, the overlapping of information systems with the tax authorities, changes of criteria that arrive mid-year, or special regimes whose requirements are hard to follow without professional help. The digitalisation of invoicing and tax control can be a real opportunity to reduce burdens, provided it is rolled out with reasonable timetables, clear standards and time to adapt. If it turns into a race against shifting deadlines, the benefit is diluted.

Nor do I find it defensible for incentives for investment, innovation or hiring to be designed to last a single financial year. An incentive only changes decisions if the business owner believes it will still be there when the project is carried out. If they do not believe that, they simply do not count on it.

What I Would Ask of Those Who Legislate

Without claiming to be exhaustive, there are three things I consider reasonable and that do not depend on ideology:

First, assess before legislating: estimate the impact of each change on small businesses, not just on tax revenue. Second, give sufficient time to adapt and publish the criteria in advance, so that nobody learns of a change when their quarter is already closed. Third, think about permanence: if a measure is good, let it be good for years; if it is temporary, let it be clearly explained why and until when.

None of this is free or simple, and I acknowledge that the tax authorities have to balance revenue, the fight against fraud and the cohesion of the system. But precisely because that balance is hard to strike, it should be pursued with method and not in fits of urgency.

While we wait for a more stable framework, businesses are left to adapt. At Zythos Business we work in exactly that field: we help freelancers and SMEs understand what is changing, what really affects them, and how to organise their accounting and obligations so that the next regulatory change is a routine task and not a shock.