Calling into question the tax on banks and utilities
The Foundation for Applied Economics Studies (Fedea) has published a very critical note signed by its Director, Angel de la Fuente, pointing out the "arbitrariness" of the new extraordinary taxes on the financial and energy sectors announced last July by Pedro Sánchez and seconded by the parties that make up and support the coalition government.
Main conclusions of the analysis:
- A controversial aspect of the proposal is that it grants the new taxes the status of a non-tax public contribution (a figure designed for the financing of public services provided under concession).
- Fedea points out that "the main problem of the text is the arbitrariness of these new levies created ad hoc".
- The proposal seeks to "interfere with the free functioning of companies and markets, to try to preset by law the effective distribution of the burden of a tax regardless of market conditions, which are those that determine the real incidence of taxes in an unplanned economy".
- The objective is to place the blame on sectors that "can benefit the most from the rise in prices through an improvement in their margins". However, "neither banks nor utilities are among the most profitable sectors in Spain 2021. Clearly ahead the industry, commerce and hospitality and even more profitable the information and communications sector". Thus, its author insists that "no minimally consistent reasons are offered to support the thesis that the new taxes are not arbitrary levies but rather well-proportioned contributions”.
- Regarding the provision of the proposal that forbids the direct or indirect passing on of the levy to the customers of the companies affected (and which entrusts the CNMC, with the collaboration of the Bank of Spain, to monitor compliance with this prohibition), Ángel de la Fuente stresses that this "represents an attack that is difficult to justify against the freedom of enterprise, which is constitutionally protected. Ensuring that the increase in a specific item of costs is not passed on is mission impossible, but establishing the obligation to try to do so may open up a dangerous path towards direct interference with business decisions in which the government should not interfere".