Spain’s ruling left-wing coalition introduced a bill on Thursday to create a temporary tax on banks and power utilities, aiming to raise 7 billion euros ($7 billion) by 2024 to fund measures to alleviate cost-of-living pressures.

“There is no social justice without fiscal justice,” said Socialist Party spokesperson in Congress Patxi Lopez, adding that it was the duty of a “progressive government” to share the costs of the crisis “fairly and equitably”. The tax, plans for which were first outlined on July 12, would include a 1.2% levy on sales by Spanish electricity utilities and a 4.8% charge on net interest income and the bank’s net commissions, according to the wording of the proposal.

Rising fuel prices prompted Spanish truckers to pull out for several weeks in March, disrupting supply chains and forcing some factories to shut down production. The government has not yet specified how it will distribute the proceeds of the tax. He has already introduced some measures to offset rising inflation, such as a rebate on fuel costs, and previously introduced a tax on utility companies deemed to have profited from high gas prices.

Banks are now being targeted on the grounds that their profitability is boosted by rising interest rates. The tax will only apply to companies with at least 1 billion euros in turnover in 2019, while the threshold for banks will be 800 million euros, according to the bill.

“The new tax is not deductible for corporation tax purposes and cannot be passed on to customers,” the proposal says, setting fines of 150% if the amount of tax is passed on. NEGATIVE OPINION

The proposal must be debated in parliament where changes could be introduced. The tax on banks – whose net interest income is a measure of income on loans minus deposit costs – is expected to bring in €3 billion, while the windfall profit tax on energy companies is expected to bring in €4 billion. euros.

Some bankers have warned against such a tax and Bank of Spain Governor Pablo Hernandez de Cos hinted earlier this week that the ECB may even issue a negative opinion on the tax. On Thursday, the chief executives of Santander and Sabadell warned of the stigmatization of the sector, adding that the tax would mainly hit small savers and shareholders.

“It is hardly possible to fight inflation with taxes,” said Santander CEO Jose Antonio Alvarez. “If 3 billion of capital leaves the sector, that removes 50 billion euros of lending capacity.” Asked about the measure on Thursday, Repsol chief Josu Jon Imaz said oil and gas companies operating in free markets were not making windfall profits.

“We must not forget the billions of euros in losses we have recorded in previous years,” Imaz told analysts on a conference call. “Oil and gas are risky, there is no regulated price that ensures profitability.”

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)

About The Author

Related Posts