For seven years, the Congress of Deputies had not hosted a debate on the state of the nation. This fact, together with the economic situation that both Spain and the Western economies are experiencing, beset by historical levels of inflation and very negative effects derived from the war in Ukraine, were enough to arouse an unusual interest in the measures that the President of the Government, Pedro Sánchez, would put on the table.
His intervention did not disappoint, since he unraveled an important battery of measures, some complementary to those already included in Royal Decree Law 11/2022, of June 25, ranging from new taxes on energy companies and banks to reductions in the transport subscription, increase of scholarships to students, reinforcement of health and improvement of firefighting programs. However, the measures that aroused the most interest and that traded negatively in the markets were those of a tax nature. Specifically, the president announced two new taxes on energy companies and banks, both of a temporary and exceptional nature, with the aim of raising 3,500 million euros.
The tax on large energy companies (electricity, gas and oil) will be levied on extraordinary profits obtained in 2022 and 2023 and its collection is estimated at 2,000 million euros per year. This tribute was already announced by Sánchez in the Council of Ministers in which he extended the measures to contain the rise in prices, although yesterday he detailed the collection objective and the time horizon.
However, the announcement of a new tax on banking entities was the most surprising of the set of measures. Its nature will also be exceptional and temporary, with a collection of around 1,500 million euros per year expected in this case.
With these two measures alone, President Sánchez expects to collect around 3,500 million euros a year, 7,000 million in the two years in which these new taxes are expected to be applied.
Sánchez stayed there and did not detail, in any case, the formula that will guide these new taxes, although he did previously explain that the Government is seeking to adapt the tax on the extraordinary benefits of electricity companies that Italy already applies. It had to be the Minister of Finance, María Jesús Montero, who later, in statements to the media in Congress, indicated that these taxes will tax the profits of companies with more than 1,000 million euros in turnover.
He described the opposition of the PP as healers who do not want to cure but to benefit
He attributed the cause of the lack of control of prices to Covid and the war in Ukraine
The two taxes will be registered in separate bills by the PSOE and United We Can in order to be in force in 2023. The two new taxes will be processed “in parallel” with the new General State Budgets, being convinced that it will have the support of the partners who have backed the “progressive measures of the Government”.
The president has asked large companies to demonstrate their corporate social responsibility by reverting their extraordinary profits to workers and consumers: “This is the time to test the social commitment of large companies,” he said, so that “any indirect benefit does not fatten the income statement or the directors’ salaries”, but rather that it reverts to society.
The president announced that he will “immediately” unblock Operation Camp for the construction of up to 12,000 homes in Madrid, of which 60% will be public protected housing and 40% free housing. He also announced that Renfe season tickets will be subsidized at 100% until December 31.
The president began his speech by turning to the left, affirming that his objective is to “leave his skin” in defense of the working middle class, the main affected by inflation. Sánchez wanted to make it clear from the beginning that “the great challenge” facing Spain is “inflation”, which he has described as a “serious illness” for the economy. Sánchez stressed that “it impoverishes everyone” and “affects the most vulnerable groups.”
Within his arguments, he rejected that it is the fault of the Government as the opposition says and for this he used a medical simile. Sánchez compared the opposition to the “healers” for blaming his management at the head of the Executive for the high inflation that Spain suffers.
For this reason, he has criticized that he is singled out for “ideological prejudices” through “media powers.” Thus, he argued that it is “important” to know “the causes of the diagnosis” of inflation, criticizing that there are those who intend to profit from the current situation: “The healer does not intend to cure, he wants to benefit,” he indicated, before referring to the rise of the SMI or the promotion of renewable energies as causes that are put forward by the opposition to ensure that with another Executive, inflation would not have risen.
With this simile, Sánchez attributed the origin of the current lack of control of prices to the Covid pandemic and the war in Ukraine, alluding that at this time we must pay attention to medical specialists and not to healers.
The stoppage that the pandemic meant for the economy caused a mismatch in the supply chain that, together with the new demands of citizens once the toughest measures of the pandemic had passed, generated delays in the distribution of goods and thus cited the lack of chips in the automotive sector or the collapse of many ports worldwide, or the long waiting lists in the demand for certain products, caused the shortage to translate into price increases. Already on February 24, with the invasion of Ukraine by Russian troops, the situation worsened when the energy component was introduced.
Average inflation, he said, “could end this year at 6.5%, although “everything will depend on how the conflict in Ukraine evolves”. The last leading indicator of the CPI for June, whose definitive data will be known today, was established at 10.2% year-on-year. “If Putin cuts off the gas supply, we have to be united,” he said, “we are Europeans through and through,” for which he added that energy-saving measures should be adopted.