Europe

Spain slaps new taxes on banks to pay inflation aid

Spain slaps new taxes on banks to pay inflation aid

Storm tax

12.07.2022

The government expects the tax to raise about € 1.5 billion annually, after Spain introduced additional taxes on energy companies.

The government expects the tax to raise about € 1.5 billion annually, after Spain introduced additional taxes on energy companies.

Spanish Prime Minister Pedro Sanchez

Photo provider: AFP

Spain will raise taxes on major banks and energy companies, raising billions of euros to fund policies to mitigate the impact of record inflation on consumers.

At a speech meeting on Monday, Prime Minister Pedro Sanchez announced a number of new steps aimed at withdrawing more money from companies benefiting from rising interest rates and rising energy prices.

Taxation on both financial institutions and energy companies lasts for two years. The government expects the former to raise around € 1.5 billion ($ 1.5 billion) annually, but the storm tax on energy will collect € 2 billion annually.

After the announcement, bank stocks fell in Madrid’s trading. CaixaBank decreased by 9%, BBVA SA decreased by 5%, and Banco Santander SA decreased by about 4%. Spain’s IBEX 35 was the index of the worst performing countries in the major European markets on Tuesday.

“We need to justify the burden of this crisis, unlike the last crisis that fell on the most vulnerable,” Sanchez said.

This measure represents a dramatic step by Spain, as governments across Europe are trying to fund policies to help households whose living cost crisis is exacerbating. Inflation in the euro area is already close to 9%, while inflation in Spain is over 10%. Other governments, including France, are responding to this pressure, and France is looking at how it can expand its energy tariff shield for the poorest households next year.

The latest move is above the € 9 billion announced by Sanchez about two weeks ago, as soaring living costs have reduced his popularity. The total cost of crisis response to date this year is € 15 billion.

His surprising move to the tax bank could help Sanchez ease tensions with his coalition partner, the far-left party Podemos.

Family oppression helped the conservative popular party defeat Sanchez’s socialists in the Andalusian local elections a week ago. The socialist defeat at the historic center highlights the challenges he faces in maintaining power in the upcoming general elections in late 2023.

© 2022 Bloomberg LP


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http://www.luxtimes.lu/en/european-union/spain-slaps-new-tax-on-banks-to-pay-for-inflation-aid-62cd60edde135b9236e5bf8f Spain slaps new taxes on banks to pay inflation aid

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