Spain’s proposed windfall tax on banks and energy firms could lead to thousands of jobs being lost and deal the wider economy a blow worth around 5 billion euros ($5.1 billion), a business-backed think-tank warned on Monday. In July, Spain’s leftist ruling coalition introduced a bill in parliament to create a temporary levy on banks and large energy companies, aiming to raise 7 billion euros by 2024 to ease cost of living pressures.
“The levies could lead to 72,000 fewer jobs, so the effect on the economy as a whole is even more significant than the effect on the sectors concerned,” the Instituto de Estudios Economicos (IEE) said. Its chairman Inigo Fernandez de Mesa expected the banking sector to lose 35,000 jobs, or around a fifth of its total.
The taxes are part of a range of government measures aimed at helping Spaniards cope with spiking inflation. On Tuesday, parliament will decide whether to accept the bill for further debate in its current form or seek amendments. The ruling coalition wants the legislation approved before year-end.
Speaking to the lower house on Monday, Prime Minister Pedro Sanchez said his government would “defend the social majority of our country”. Energy firms and banks had previously warned about the potential negative impact of tax measures at a time when recession is looming in Europe.
European Central Bank Vice President Luis de Guindos also cautioned on Monday against any tax that risked increasing costs for borrowers and jeopardising the banking sector’s solvency. “It should not affect funding costs for companies and households and it should not affect credit growth,” De Guindos said at an event in Spain, adding that the ECB could issue a non-binding opinion after being consulted by the government or on its own initiative.
The IEE also said that approval of the taxes could cause legal uncertainty. “If the proposed law, as drafted, is approved, it will give rise to a series of appeals against its application,” it said.
Changes to the bill could still be introduced but banks have already said they would consider legal challenges.