Spanish Government Extends Energy Windfall Tax Despite Parliamentary Opposition
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The Spanish government, led by Prime Minister Pedro Sanchez, has issued a decree extending a temporary tax on energy companies into 2025, as reported by Reuters. This move comes despite last week's parliamentary vote to eliminate the levy.
The decree, which takes effect on January 1, needs to be confirmed by parliament within 30 days for it to apply throughout next year. However, achieving this may prove challenging given the minority government's partners on the left and right are at odds on the issue.
Sanchez justified the extension, arguing that it reflects commitments made to partners and necessitates an "extra effort" from energy companies while simultaneously incentivizing strategic investments crucial for decarbonization.
The tax credits were initially demanded by Junts, a center-right Catalan separatist party, and the PNV, a Basque nationalist party, who argued that the levy negatively impacted investments in their respective regions.
Utilities, however, have warned that extending the 1.2% tax on companies exceeding €1 billion in turnover will jeopardize €30 billion in renewable energy investments.
The temporary tax, introduced in 2022, aimed to alleviate the cost-of-living burden on ordinary Spaniards amidst soaring energy prices triggered by the war in Ukraine.
In addition to extending the energy tax, the cabinet also approved a six-month extension of subsidies for public transport and a 2.8% increase in pensions, benefiting approximately 12 million retirees.
Separately, the Economy Ministry announced an extension of restrictions on foreign takeovers of strategic Spanish companies until the end of 2026. This measure, originally implemented to protect Spanish firms during the COVID-19 pandemic, necessitates authorization for foreign acquisitions of significant stakes in companies operating in sectors such as defense, healthcare, and telecommunications.
These restrictions were triggered when Saudi Arabia's STC Group increased its stake in Telefonica to 9.97%. Following a months-long review, Madrid ultimately approved the transaction in November.