The Government will give the green light to the extension of the tax on extraordinary profits of large electricity companies in the Council of Ministers next week, the last of the year. Before the measure expires on December 31, the Executive will thus resort to promoting, on its own initiative, the continuity of the tax through Royal Decree and after verifying the impossibility of bringing all parliamentary partners to an agreement.
The negotiation table between the Ministry of Finance and the Congress groups was reconvened this Wednesday afternoon. Like last week, Junts and PNV, openly against the tax, declined to attend the meetings. And Podemos did not attend either, which was the one who demanded the convening of that table in exchange for supporting the tax reform, something that felt especially bad in the PSOE and other left-wing parliamentary partners. Those from Ione Belarra argued that there was no “reason for being” to attend an appointment in which there is no possibility of agreement between the investiture allies.
The Treasury, however, maintained its commitment to the rest of the partners and the meetings took place on Wednesday afternoon with groups such as ERC, EH Bildu or BNG. The fiasco of this forum promoted by Podemos, added to the realization that it is a chimera to agree between the progressive partners and the conservatives regarding the taxation of large corporations whose interests are also defended by the Basque nationalists and those of Carles Puigdemont, has led the Government to move on its own and resort to the Royal Decree.
From ERC, EH Bildu and the BNG confirmed this in a joint statement after the meetings with the Treasury. “ERC, EH Bildu and BNG have agreed today with the Spanish Government on the approval in the Council of Ministers, before the end of the year, of the Royal Decree that will allow the tax on energy companies to be maintained, with the aim of validating it in Congress and processing it. as a Bill to convert it into a tax. “The design of the text will include bonuses for renewable projects proposed by other groups, thus showing our willingness to achieve a broad and balanced agreement between all the political forces necessary for its approval,” the text reads.
The note from the Basque, Catalan and Galician sovereigntists adds that “in this way, the agreement reached on November 18 between ERC, EH Bildu and BNG with the Government is fulfilled to guarantee that energy companies continue to pay what they are entitled to. The agreed formula – decree and subsequent processing – is the only possible one to ensure its entry into force on January 1, 2025, as well as its conversion into a tax in a few weeks and its agreement with the Basque and Navarrese provincial treasuries.
In reality, it is a more symbolic step in politics than in the real impact it may have regarding its application. By extending the tax, in the department of María Jesus Montero they consider that they will have fulfilled their word given to partners such as Podemos, ERC or EH Bildu. And it will be another thing to be able to validate that measure in the Congress of Deputies.
Once the tax is extended, its validity will be automatic as soon as it is published in the Official State Gazette and after the current tax expires on the last day of the year. But then it must be validated by the majority of the Congress of Deputies within a maximum period of 30 days from its promulgation. And that is where the votes of Junts and PNV will come into play again, essential to achieve a parliamentary majority of support.
To date, both the Basque nationalists and the Catalan independentists have shown themselves to be inflexible regarding a tax rate that they deny. Although among the socialist ranks there are those who glimpse a crack for understanding. The Treasury’s intention in next week’s decree is to introduce bonus mechanisms for companies that commit to investing part of their profits in the decarbonization of energy. An element that some in the Government think could serve as a landing pad for Junts’ demand that the tax not harm the investments planned in Catalonia. For the other leg, that of the PNV, there is also dialogue from the Executive regarding the demand that it be a management and collection that is fully assumed by the Basque Government.
The tax was designed in 2022 to tax the extraordinary profits achieved by companies in the energy sector due to their ability to take advantage of the inflation crisis to increase the margins of their businesses. “Both credit institutions and energy companies accumulate record profits, so a greater tax contribution is coherent, resulting in better public services for the social majority of the country,” the Treasury defended at the end of September 2024, when published the tax collection data for large electricity and oil companies, which was 1,164 million on their 2023 profits, a figure similar to that of the previous year.
The four largest listed energy companies in Spain (Iberdrola, Endesa, Naturgy and Repsol) achieved a joint profit of 10,247 million euros in the first nine months of 2024, exceeding the record profits of 9,037 million that they achieved until September 2022. That year, Natural gas prices shattered all highs after the energy crisis that followed the Russian invasion of Ukraine in February 2022. Cepsa, which is not listed on the stock exchange, adds almost 500 million net profit in the same period of 2024, reports Daniel Yebra.
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