Banks and electricity companies say new tax ‘unjustified’

The banking and energy sectors denounced on Thursday that the new tax introduced by the government for large financial, electric, gas and oil entities, this will mean an obstacle to economic recovery and investmentwhich will be counterproductive to achieving its objective of fighting high inflation.

The government has proposed, by means of a bill, to temporarily tax with a rate of 4.8% on its interest margin and net commissions of financial entities whose turnover exceeds 800 million euros, and whose a rate of 1.2% of total sales energy companies with a turnover of more than 1,000 million euros per year.

This provoked the reaction of both sectors which, through organizations such as the Spanish Association of Banks (AEB), the Spanish Confederation of Savings Banks (CECA) or the Association of Electricity Companies (Aelec ) expressed their rejection of the measurewhich they consider more as a “ballast” than as a solution to rising prices.

Aelec: the measure is “contrary” to the transition to renewable energies

For energy companies, the introduction of a new tax “is not justified by the existence of extraordinary profits, since these companies they do not enjoy these benefits by all the measures approved to date”, such as the mechanism of the “Iberian exception”, among others.

The Association of Electricity Companies, which represents companies such as Endesa, Iberdrola and EDP Spain, warned of the “insecurity” that the measure could generate among investors, thus weighing down the process of “decarbonizing our economy ” and reduction of energy dependence of fossil fuels.

“The imposition of this type of tax is clearly contrary to the objective of massively integrating renewable energies to the electrical system and facilitate the energy transition”, he insists.

For Aelec, the introduction of a tax is “ineffective” to contain the rise in prices and, in addition, “contracts economic activity, undermines the challenge of accelerating decarbonizationand this does not favor the process of electrification which is necessary at the moment”.

Oil companies demand “a stable legal framework that does not stop investments”

The Spanish Association of Petroleum Product Operators (AOP) also spoke out against the new energy tax, deeming it “arbitrary” and called for “a stable legal framework that does not stop investment”.

In a press release, the employers of the oil companies – of which Repsol, Cepsa, Galp or Bp, among others, are part – stressed that the profits of the sector are “cyclical and volatile”, recalling that in 2020 “the losses were extraordinary “.

“Advantages are not distinguished by their ordinary or extraordinary characterbut they are rather cyclical and the result of market conditions reinforced by investments made at risk, without a regulated rate that ensures their profitability”, he indicated, stressing that “what today may seem like extraordinary profits ‘, in 2020 were ‘extraordinary’ losses.

The bank recalls that it is already making a “relevant” contribution

In a joint statement, the AEB and the CECA warned of the consequences that the new tax could have for financial stabilityin a context marked by rising prices and geopolitical tensions.

In this way, they recall that the sector is already achieving a “relevant” contribution to the Spanish economyas well as the sustainability of public expenditure through specific taxes.

In this sense, the director of CECA’s tax consultancy, Juan de Villota, has indicated in a video statement that in Spain use has been made of “each of the tax figures” to tax the sector financial, recalling that the bank has a progressive rate in corporate tax, pays a tax which is levied on the capture of deposits, assumes the tax on mortgages from 2018 and pays the tax on financial transactions to from 2021

In addition, from the sector, they defend that a measure of this type affects the credit and risk decisions of the entities, as well as to its ability to compete in the single European market.

Despite this, both show their willingness to dialogue with the government and parliamentary groups when dealing with the standard. The two associations, which claim to analyze the technical details of the new regulations, recall that the negotiation must relate to the “basic principles” of the Spanish tax system, such as “equality, non-discrimination and economic capacity”.

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