Spain lags behind the OECD in the protection of private property.
positive correlation with a range of indicators that represent, to varying degrees, the progress of the economy and society.
Economic progress and protection "When governments violate property rights, this leads to a disruption of supply and demand, distorting the market, displacing some activities or artificially raising the cost for others," says Iñigo Fernandez de Mesa, president of the Institute for Financial Studies (IEE). He emphasizes the close link between economic progress and the protection of property rights. Gregorio Izquierdo, director general of the IEE, notes that "there is clearly a close relationship between economic progress, characterized by GDP per capita, and the protection of property rights, with a correlation of about 82%,while in the case of investment (also per capita) the correlation is 74%". On this point, Fernández de Mesa believes that "governments must act correctly, because a legal system that is not considered a guarantor of these rights will limit and block innovation and entrepreneurship". Furthermore, he states that "property rights are one of the key factors that positively influence the economic progress of a country, there is a pronounced positive correlation between protection against the risk of nationalization and the development of per capita GDP. The protection of such rights is a key institutional element in foreign investment decisions. "
Three aspects assessed
The global index takes into accountthree separate aspects: the legal and political environment (independence of the judiciary, rule of law, political stability and control of corruption), which places Spain 28th in the ranking (6.0 points). The Global Index recognizes the outstanding performance of the Spanish Property Registry (9.5 points). The second dimension focuses on the protection of physical property (physical property rights, Property Registry and access to finance), in which our country ranks 29th (6.6 points) thanks to the outstanding performance of the Property Registry, offset by difficulties in access to finance (4.4 points), according to the World Economic Forum's Global Competitiveness Index. And finally,Intellectual property protection (intellectual property rights, patent protection and anti-piracy) is analyzed, improving Spain's position in the Global Index, where it ranks 25th (6.7 points).
Spain stagnates in protection "The 2019 score confirms the stagnation of our country over the last decade, as there has been almost no improvement in the protection of property rights, and the actual score for 2019 is slightly lower than before the crisis," explains Fernández de Mesa. In total, out of 129 countries, the 2019 Index shows an average overall score of 5.8 out of 10.
With regard to OECD countries
The leader in the protection of private property rights is Finland (8.8 points), followed by Switzerland (8.6) and New Zealand (8.5). In the European Union, Sweden, Luxembourg and the Netherlands have the highest scores with 8.3 points. Yemen, Haiti, Venezuela, Angola, Haiti and Bangladesh rank last in the Index, while the worst ranking among European Union member states is Greece, ranked 72nd out of 129, with a score of 5.2.
Confiscatory taxes Gregorio Izquierdo explains that the German Constitutional Court has established that taxes (personal and property) cannot exceed 50% of income because the use of property serves both private benefit and the nationalinterests; France in turn, following a 2012 Constitutional Council decision, prohibits taxes (personal and/or property) exceeding 75% of income. However, the IEE believes that in Spain there are significant fiscal obstacles, such as the property tax, which could result in taxes exceeding 100% of income. For much lower taxes, the German and French Constitutional Courts have held such taxes to be unconstitutional. With respect to the Inheritance and Gift Tax (IGT), he argues that the principle of the prohibition of confiscation in tax cases is violated because it is a tax that easily reaches extremes, forcing taxpayers to give up their right to property. Specifically the progressive taxation scale, together with thethe application of multiplication factors depending on the degree of kinship and the existing property, could bring the rate of MIT in Spain to 81.6%.
A special case of property right violation constitutes the so-called indirect expropriation, a standardized procedure in which the administration actually deprives the owner of part or all of the content of the property right. Indirect expropriation is de facto expropriation through regulatory changes that at least reduce the value of the property and, in some cases, destroy it completely.
Occupancy of the home "The essence of the right of ownership is incompatible with a forced severance of the use and enjoyment of property from the desires and will of itsthe rightful owner, which unfortunately sometimes happens," opines the IEE director general. "The clearest case manifests itself when the institutional environment allows so-called residential occupancy processes that interfere with the owner's ability to have the use and benefit of his property right. In fact, when one speaks of empty dwellings to justify interference with ownership, one forgets that this circumstance is often due to problems in the institutional environment, such as tight deadlines and imbalances of rights that prevent owners from earning an income commensurate with the risk," explains Fernández de Mesa. "In this context, so-called mandatory temporary transitions, which are temporary confiscations of the entire asset,paying an administrative price that is always lower than the service and that completely fails to recognize the inaccessibility of the asset," concludes the IEE president.
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