Why not also fiscal education?

I have recently relayed,  through the Financial Education Network of Spain (coordinated and funded by the Spanish Confederation of Savings Banks, in Spanish CECA) that the OECD, through its report “National Strategies for Financial Education “, proposes to introduce this topic to all the citizens of the G-20 (the 20 wealthiest countries in the world) . The report shows that financial education level is low among European consumers, and in the current economic crisis, it is a weakness that the OECD believes should not be allowed.

I totally agree that most Spanish citizens know little or nothing about finance, and an introductory class about banking products, savings management, commissions, pension plans, etc …would have helped us to face adulthood.  But what do Spanish citizens know about taxation issues: why are taxes necessary, what taxes do we pay, which are the main income sources, etc.?  Aren’t these issues as important or more, for the democratic and economic stability of our country?

In Spain, several initiatives in Tax Education have existed since the 80s, but it was not until 2003 that the Tax Agency AEAT created the “Civic-fiscal Education Program” (PECT in Spanish). However, despite the program coordination team efforts and the wide network of trainers, it has never been as successfully institutionalized as the financial education, which has fewer years of existence. From my point of view, some reasons for this fact are:

– The AEAT is a public institution, financed by the General State Budget and must prioritize its decisions and programs. The PECT has received great reviews, great effort and work by public officials but it does not offer short-term returns (it is a values education program that will pay off in the medium to long term with the tax awareness for future taxpayers), and for an institution which main objective is collection, these issues sometimes don’t have the adequate priority. On the other hand, CECA is a private entity, which primary focus is its customers, and better consumer information making them stronger. In addition, they are supported by other economic lobbies such as the Bank of Spain and even the OECD (as observed on the report).

– The Resources for PECT have always been limited by budget constraints, it has even come to be technically in “stand by” due to lack of resources during the last months, and the success of the program has been the work and persistence of an enthusiastic volunteering team. On the contrary, Financial Education has significant budget and support from other institutions, so they have been able to develop an institutional Network and organize an annual meeting for the exchange of experiences and benchmarking.

– The current economic crisis and its impact on consumers and users, such as the mortgage crisis or the banking frauds, has highlighted the need for more information on these issues and the importance of financial education among young people. On the contrary, this crisis has not exacerbated the ignorance and misinformation of citizens regarding their tax obligations but simply made them more likely to reject them due to tax fraud scandals, higher taxes, etc. .

For these reasons, it really calls my attention that for the EU, the main goal is to fight against fraud and tax havens but without developing Tax Education as one of the main bases for citizens to be aware and informed of their tax obligations, in order to achieve the highest possible voluntary tax compliance levels in the future (with the lowest possible management costs for sanctions and for fighting fraud in general). But while younger generations are not educated and adults are not well informed, a “tax rejection” (withdrawal and rejection of all aspects related to taxes) may keep growing, as it is already the case in our country.

Perhaps Nordic countries such as Germany and France are more aware of the need to pay taxes through the important work in education on these issues and on citizenship awareness in general; however, southern European countries with large deficits do not have sufficient tax awareness because we are not well educated on this issue.

Do you think that most of your fellow Spanish citizens know for what and why they pay taxes? Do you think that the EU should take joint actions in this matter? And should Latin America also undertake regional actions in this regard?

Let’s keep thinking about it…

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