The Government is still looking for a formula to tax energy companies more in the new anti-crisis plan | Economy

The Executive is working against the clock to have a new anti-crisis plan ready this Saturday that manages to cushion the blow that inflation supposes for the economy. You should already be used to these races with time against you after the exercises carried out during the pandemic, but the mechanism within the coalition government is still not fully oiled. The differences between the two souls persist and that means that the appropriate formula is still being sought to tax energy companies —not just electricity companies— and distribute the negative impact of the crisis resulting from the war in Ukraine. “We have to find the most appropriate instrument, the fiscal, financial and legal vehicle to fairly distribute the negative impact of this crisis,” said the first vice president of the Government, Nadia Calviño, on Wednesday.

The first to launch the need for energy companies to pay more taxes was the second vice president, Yolanda Díaz, who recovered a well-known initiative from the United We Can wing: “Large energy companies must make an extra contribution. We propose to increase the type of companies by 10 points to raise between 1,500 million and 2,000 million euros, ”she announced on her Twitter account on Monday. However, it seems that this demand has fallen on deaf ears. In fact, the first vice president, Nadia Calviño, has said that she “ignores” these proposals that are being talked about in the media during her participation in the seminar organized by the Association of Economic Information Journalists (APIE) at the International University Menendez Pelayo (UIMP). In other words, she implies that this issue has not reached the Council of Ministers.

After distancing himself on behalf of the Executive from that initiative, Calviño has assured that the appropriate formula is being sought to tax energy companies more and be able to cover the additional expenses that will be approved in the next shock plan. In this way, there is agreement on the final objective, but not on the way in which it would be achieved. “[Esas propuestas] they do not correspond to the serious, responsible and technical work that is being done within the Government. What we are clear about is that the impact of the war must be distributed fairly. And this of course implies taxing the energy companies, as we have already done with the establishment of that tax or that additional charge for extraordinary profits of the electricity companies”. What is closed and will be included in the shock plan is a reduction in VAT from 10% to 5%, as the president, Pedro Sánchez, has announced in Congress.

Calviño has stressed that the Government’s vision is unique. Although this contrasts with the response given by herself to Díaz’s initiative, as well as the one that occurred this Tuesday on TVE by the Minister of Finance, María Jesús Montero. “Taxation is an issue that cannot always be regulated through decree laws, nor through Budget projects. Therefore, depending on which is the final path that we choose, we can use that vehicle or not. The important thing is that it be as fast as possible and that it can be applied at the beginning of a fiscal year, which I think is the most orderly”, explained the head of the Treasury on the application of a new tax surcharge to large electricity companies.

The crisis resulting from the Russian invasion of Ukraine has disrupted the government’s economic plans. The ghost of inflation has made an appearance over all of Europe and Spain is being one of the countries that is suffering the most. In fact, it has been the Executive’s biggest headache for months, hence the measures adopted to try to cushion the upward spiral of the consumer price index (CPI). At the moment the rises seem to be sustaining somewhat (it was close to 10% and in May it closed somewhat below 9%), but it has not finished redirecting it to acceptable levels.

For this reason, Calviño has once again insisted this Wednesday on his participation by videoconference in the seminar held in Santander that the Government is working with a new scenario of higher inflation for a longer time. And he has also assured that the anti-crisis plan that will be approved in an extraordinary Council of Ministers this Saturday has not been accelerated by the electoral fiasco of the leftist parties in the elections to the Junta de Andalucía. “From the beginning we have been taking effective measures against the war, which we have been adapting.”

No cap on interest rates

Luis de Guindos, vice president of the ECB, has also participated by videoconference in the conference held in Santander, who has advanced that the rise in prices in the euro zone will not moderate this summer either. In fact, he has assured that it will remain at levels similar to the current ones, above 8%, at least until the end of the summer. In other words, there are no signs of improvement in the short term on the inflationary spiral: “If we find ourselves with second-round effects, this will lead to inflation being more extensive and affecting more components of the CPI since the monetary policy response be different”.

This situation is the one that puts the most pressure on the ECB to carry out the imminent announced rate hike: a 25 basis point hike in July and another, which everything points to being even higher (of 50 points), in September. From there, the roadmap is yet to be written. “We will look at the real evolution of inflation, our projections and we will act accordingly. We don’t know where the guys can go, it will depend on the data,” Guindos warned. In this way, there is no ceiling for the types and the fight between hawks Y pigeons within the Eurobank on what figure the so-called neutral rate will be located —the one that does not serve to expand the economy, but does not contract it either.

In addition, the vice-president of the ECB explained that the program launched to prevent the fragmentation of the debt of the community countries should not interfere with the normalization of monetary policy or with the fight against inflation. In fact, he believes that this tool will serve to broaden the bank’s options: “Having an anti-fragmentation instrument frees up monetary policy to be able to act more forcefully against inflation.”

When questioned about the conditionality of this tool, Guindos has assured that it has not been addressed at the moment. Something that Calviño had an impact on minutes later. Despite this, it seems clear that some conditions will be imposed, although they will be very far from those adopted in the Great Recession: “We will see them”, to which he added: “We have not yet discussed in the Governing Council the characteristics of this new program, but we are in a very different environment than in 2012”.