Spain’s economy could take a hit from $5 billion in temporary taxes, think tank warns

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MADRID – Spain’s proposed windfall tax on banks and energy companies could lead to the loss of thousands of jobs and deal a hit to the wider economy of around 5 billion euros (5 .1 billion), a business-backed think tank warned Monday.

In July, Spain’s ruling left-wing coalition presented a bill to parliament to create a temporary tax on banks and big energy companies, aiming to raise 7 billion euros by 2024 to ease pressures on the cost of living.

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“The levies could lead to 72,000 fewer jobs, so the effect on the economy as a whole is even greater than the effect on the sectors concerned,” said the Instituto de Estudios Economicos (IEE).

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Its chairman Inigo Fernandez de Mesa expected the banking sector to lose 35,000 jobs, about a fifth of its total.

The taxes are part of a series of government measures to help Spaniards cope with soaring inflation.

On Tuesday, parliament will decide whether to accept the bill for further debate in its current form or to seek amendments. The ruling coalition wants the legislation to be approved before the end of the year.

Addressing the lower house on Monday, Prime Minister Pedro Sanchez said his government would “defend the social majority of our country”.

Energy companies and banks have previously warned of the potential negative impact of fiscal measures at a time when recession looms in Europe.

European Central Bank Vice President Luis de Guindos also warned on Monday against any tax that could increase costs for borrowers and jeopardize the solvency of the banking sector.

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“It shouldn’t affect corporate and household funding costs and it shouldn’t affect credit growth,” De Guindos said at an event in Spain, adding that the ECB may issue a non-binding opinion after have been consulted by the government or on its own initiative. initiative.

The IEE also said that approving the taxes could lead to legal uncertainty.

“If the bill, as written, is approved, it will give rise to a series of appeals against its application,” he said.

Changes to the bill could still be introduced, but the banks have already said they will consider legal challenges.

($1 = 0.9866 euros) (Reporting by Jesús Aguado; Editing by Andrei Khalip and Toby Chopra)



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