The main subject of conversation just about everywhere is the same: the state of the economy and what we can do about it. The government has initiated a series of measures aimed at helping ordinary people, including direct financial assistance, relaxed mortgage payments, easier credit and tax rebates. But as a glance through related Internet sites shows, most people are highly suspicious of these measures, convinced they will never benefit from state intervention in the economy.

While rumours abound and suspicion deepens, SUR takes a closer look at some of these options designed to help us all through hard times.

400 euro rebate - Approved in May 2008

Many taxpayers got an unpleasant surprise when they sent in their tax returns this year, and it did not take long for the rumours to spread. Internet commentators began to claim that the 400 euro tax rebate which many workers and some pensioners had received had simply been an empty electoral promise, and that the money would have to be returned.

True or false? Although the scheme appears complicated and the experts we spoke to seem unable to agree on how helpful it actually is, they agree that those who have earned more, and therefore owe more in tax, will receive less in rebates than they might have expected.

Almost half a million people received this 400 euro rebate throughout 2008. As José María Mollinedo, secretary general of the Taxation Ministry trade union, explains, nothing is for free, and this money is no more than a new rebate paid in advance by the tax authorities to encourage spending. But when it comes to making out one’s tax returns, the amount one can expect in rebates depends on how much of one’s salary has been retained at source (‘retenciones’) each month.

In Mollinedo’s view, the only people to have really benefited from the 400 euro rebate are those who are not obliged to present annual tax returns because they have not earned enough throughout the tax year, but who have already received this 400 euros. Some tax payers will thus see no change in the amount they will have to pay, but at least, as Mollinedo tells us, nobody loses in the scheme.

There will, nevertheless, be some tax payers who will end up paying more than they have expected, quite apart from the issue of the 400 euros rebate. As Mollinedo explains, this is the result of the fact that the government has not adjusted varying levels of inflation in calculating what exactly a tax payer owes this year. This means that those who have enjoyed salary increases in line with the retail price index run the risk of having their tax bills estimated on one level of inflation and paying tax on another level.

Tax expert José María Muñoz goes a step further and calls the 400 euros rebate a fraud. As far as he is concerned, it is no more than a kind of loan on tax owed, and it does not benefit anybody when the time comes to pay one’s taxes. “The government has given us some tax relief for a short while and is now set to get it all back, and more,” he says. Many people will be badly hit, he adds, when they find themselves paying tax on a different level of inflation from that which they had expected to pay on.

Mortgage moratorium - Began on 1st January 2009

More than 15,000 Malaga families, according to data from the PSOE party, could benefit from a plan by which they pay only half their monthly mortgages, introduced by the central government to provide financial assistance for those on the dole or in severe economic difficulties. These people, nevertheless, will have to wait some time to avail of this plan, given that since it was introduced on 1st January of this year, the banks have not been fully informed of how exactly it works. This was confirmed by sources in the Unicaja, La Caixa, Banesto and Cajamar banks in Malaga city, who assured us that they had not yet received information about the plan.

The government said a couple of weeks ago that it had not yet finalised the plan, and that it would become operative from 1st March.

The Association of Banking Services Users, on the other hand, claims that the banks have no interest in the plan, because they would lose money through it. As Alfredo Martínez, the Malaga delegate of the association, tells us that the requisites for benefiting from this financial assistance would be very stringent, in that those wishing to obtain it would have to have been at least three months out of work, and all their mortgage payments would have to have been paid. But when a person has been out of work for three months, Martínez points out, they will have already come to an agreement with their banks regarding mortgage payments, or they will be in the process of having their homes seized by the banks because of their inability to pay the mortgage.

We will now have to wait and see if the changes introduced by the government a couple of week s ago- by which the period in which the mortgage has to be paid has been extended to 15 years - will encourage the banks to react quickly. Some sources within the banking sector, however, have assured us that when a client who pays his mortgage regularly begins to have difficulties in continuing to do so, they prefer to negotiate directly with that client to reach an agreement acceptable to both parties, generally by reducing the amount to be paid each month.

Businesses - Government assistance

Sixty per cent of small and medium-sized companies in Malaga are having serious problems in staying afloat. The recession has hit businesses badly everywhere and bank credit is becoming harder to come by month by month, in spite of the continued efforts by the government to alleviate the situation. The difficulties are twofold: both getting credit and complying with the numerous conditions attached. The business community in the province of Malaga see no light at the end of the tunnel, whatever the government tells them and whatever measures they come up with.

“That is not to say that all measures to fight the recession are not welcome, as long as they are effective,” says Javier González de Lara, the executive vice-president of the Confederation of Businesspeople of Malaga. “But most of them are not effective, because they are limited from a budgeting point of view and far too technical in so far as complying with the requisites are concerned.” He complains that many of the financing plans offered by the Official Institute of Credit aimed at supporting companies in trouble will not begin to function until the middle of this month. González de Lara asks for more flexibility in this respect, to ease the conditions by which credit is granted.

The government announced recently that more credit facilities for small to medium-sized companies would become available very soon.

Plan Vive - Began on 1st August 2008

“A completely successful scheme.” This is how the Minister for Tourism, Industry and Commerce, Miguel Sebastián, described the so-called Plan Vive, which substituted the Plan Prever, aimed at assisting the car sector through the provision of finance in the purchase of a new car. The Malaga city car concessionaries, however, do not agree with him. On the contrary, they disagree entirely.

“The Plan Vive was born dead,” says Rafael García, president of the Malaga Automobile Association, who believes that this plan is not the right solution to the problem of continually falling sales in the showrooms. The sector in the province of Malaga fell by 68 per cent during the month of January, and while few cars were sold as a result of the Plan Prever, it is expected that even fewer will be sold through the plan’s successor. It is clear to the concession holders that the eventual aim of the programme, which is environmental, will also fail.

The problem is that the banks are loathe to lend money for cars at this time, and even less so when there is no interest to be earned. “Aid should be offered directly to the purchaser instead,” says García, assuring us that the recent reform of the Plan Vive will serve no purpose.

Baby cheque - Began on 1st July 2007

Will parents of newly-born babies or recently adopted children continue to receive their baby cheques? Is it true that the 2,500 euros (3,500 in the case of numerous families and disabled children) in social assistance will end in 2009? These rumours have spread like wildfire through the Internet in recent weeks. In view of the overall state of the economy and the fears parents have of losing even this relatively small amount of state aid, this is a matter of considerable seriousness for may parents, and they were worried that such aid would cease on 1st January of this year. But so far, their fears have proved groundless. All requests for this financial assistance presented from the beginning of the month have been successful.

The plan was introduced at a time when there was no reason to suppose the economy would not keep growing every year in the province of Malaga, and the amount proved then to be trivial for many new parents. But considering the times that are in it, every little bit now helps, and the hundred euros per month received by working mothers with children under the age of three is very welcome.

Last year, Malaga was the sixth Spanish province in the amount of money received through the so-called baby cheques.

More than 17,387 cheques were handed over in the province, to make a total amount of 43.5 million euros spent on the scheme, according to data from the tax authorities. Since introduced in July 2007, 22,522 cheques have been paid, amounting 65.4 million euros. A total of 27,190 mothers received monthly cheques last year.