The employers of electricity, oil and banks charge in a storm against the tax
The banks anticipate that the new tax will be an economic drag and that it will cause a contraction of credit concessions in the midst of the crisis
Las big energy companies and big banks revolt against the government for the new temporary tax which will charge them 7,000 million euros in two years. The Executive’s plan is to tax at 4.8% the net commissions and interests of financial entities with income of more than 800 million per year and at 1.2% the sales of energy companies with a turnover of more than 1,000 millions.
According to El Periódico de España, a new tax that begins its parliamentary process after the presentation of a bill by the PSOE and United We Can, and which seeks that large companies finance part of the measures adopted to alleviate the impact of the inflationary spiral on homes and businesses in the midst of an energy crisis. The large energy companies in the electricity and oil sectors warn that the new tax is a brake on investments in the sector.
The employers of the large electricity companies Aelec -which brings together Iberdrola, Endesa and EDP– considers the implementation of the new tax unjustified because the sector does not have the extraordinary benefits that the Government wants to cut and warns of its impact on the renewable deployment plans of companies that require million-dollar investments and, with it, on the whole of economic activity and employment.
“The incorporation of a new tax would introduce a additional uncertainty in the companies, weighing down the ambitious investment plans of Aelec’s associates to accelerate the decarbonization of our economy and reduce energy dependence on fossil fuels from abroad”, says the employers of electricity companies. “The imposition of this type of tax is clearly contrary to the objective of massively incorporating renewable energy into the electricity system and facilitating the energy transition.”
The employers of the AOP oil companies -which integrates the large companies in the industry such as Repsol, Cepsa, BP, Galp or Eni- also warns that “the resources of the companies in the sector are essential to continue making investments to achieve climate neutrality, which will require billions of euros in Spanish refineries with a commitment to industry and employment, despite regulatory uncertainty surrounding these investments.”
The oil companies grouped in AOP have announced “billionaire investments and have launched projects to make the refining system the most sustainable”, emphasizes the association. “In order not to put these investments at risk, a stable legal framework and a design for the energy transition that allows all alternatives to compete on equal terms is necessary.”
No extra benefits?
Iberdrola y Endesa, the two largest electricity companies in the country, They already took advantage of the presentation of their half-year results this Wednesday to notify the Government that they will not find the extra benefits who claims to want to tax to prevent large companies from taking advantage of the energy crisis and the spiral of price increases. In fact, both companies directly wield the drop in profits that they are registering in the Spanish market so far this year.
The power companies have been insisting in recent months on denying the existence of the millionaire benefits that the Government says it wants to cut, since they have sold all their electricity production well in advance and at prices much lower than those set by the electricity market and, therefore, Therefore, they are not benefiting from the increases.
From Aelec it is emphasized that the energy crisis has caused a very important increase in costs that has reduced margins and profits. “A tax that is based exclusively on income and does not take costs into account, affects income that does not translate into higher margins for companies”, while the tax proposed by the Government would obtain part of its collection in activities regulated as the regulated electricity rate (known as PVPC) or distribution networks, whose margins are set by the Government itself and have not been affected by the market situation.
AOP stresses that the Government’s decision to launch a tax on windfall profits is arbitrary and unjustified. “The profits are not distinguished by their ordinary or extraordinary nature, but are cyclical and the result of market conditions enhanced by investments made at risk,” highlights the employers of the oil companies. “What today may seem extraordinary profits, in 2020 were extraordinary losses (…) Wanting to tax these profits today makes no sense. Basing the new tax on short-term benefits would only make sense if aid was provided for short-term losses, such as those experienced in 2020.”
In this context, Iberdrola provoked a clash between sectors and pointed this week to gas and oil companies as winners of the crisis. “The companies that are increasing their profits in Europe are the gas and oil companies, not the integrated electricity companies,” he said andThe Chairman of Iberdrola, Ignacio Sánchez Galán, in a conference with analysts implicitly pointing to rivals such as Naturgy or Repsol. “We don’t have extraordinary benefits. The gas and oil companies are not the same case,” he pointed out.
Repsol and the rule of law
Repsol, the largest Spanish oil company and now converted into a multi-energy group with a growing presence in electricity and renewables, has warned that it will do everything in its power to “prevent any arbitrary measure” from impacting the company.
“I firmly believe and think that we live in a safe jurisdiction, and I tell you that I have no doubt that our constitutional framework, the Spanish legal system and European legislation are going to protect us from any potential arbitrary initiative”, indicated the CEO of Repsol, Josu Joan Imaz. “Against arbitrary measures, the rule of law and legal certainty are fortunately key in the EU. So I will be very clear: I am confident because we know that we have a solid constitutional and legal framework and that both the Spanish and European markets are markets that protect business activity from any arbitrary initiative”.
Banking and credit shock
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Las employers of the financial sector AEB and CECA They make a common front to warn the Government that the new tax will not serve to combat inflation and that it will even hinder economic recovery and job creation by stopping the granting of credit by entities.
According to the financial associations, a measure of this type will affect the credit and risk decisions of the entities themselves, as well as their competitive capacity in the single European market. Santander has come to encrypt the contraction of credit in the Spanish market at 50,000 million euros in the two years in which the tax will be in force.