SPAIN’S government has announced details of its new windfall tax on banks and fuel companies which aims to bring in €7 billion into state coffers over the next two years.
The bank tax will raise €3 billion with €4 billion coming from the gas and oil companies.
The measure was announced earlier this month by Prime Minister, Pedro Sanchez as a way of bringing extra money to help fund measures to fight rising costs for people in the country.
Reduced tax on power bills and a 20 cents per litre subsidy have been extended to run until the end of the year.
A draft bill over the new windfall tax was presented before Congress on Thursday.
A 1.2% levy will be imposed on power company sales while banks will face a 4.8% levy on their net interest income and net commissions.
Repsol CEO, Josu Jon Imaz said that gas and oil companies don’t make windfall profits.
“We must not forget the billions of euros of losses we recorded in previous years,” Imaz commented.
“Oil and gas has risk and there is no regulated tariff that ensures profitability.”
Banks are now being targeted on the grounds that their profitability is boosted by rising interest rates.
“The new tax is not deductible for corporate tax purposes and cannot be passed on to customers,” the draft bill says.
The document points out fines set at 150% will be imposed if attempts to do that happen.
Chief executives from both Santander and Sabadell banks warned on Thursday that the would hit mostly small savers and shareholders.
Santander CEO, Jose Antonio Alvarez, said: “If €3 billion of capital comes out of the sector, then it takes away €50 billion euros of lending capacity.”