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Monday, May 23, 2022
HomeLatest NewsRaise taxes? Song to the sun of green taxation

Raise taxes? Song to the sun of green taxation

Proposing a complete reform of green taxes in search of a fee that could amount to between 5,000 and 15,000 million euros for the state has become a mission impossible, if only because looming energy crisis and the war in Ukraine have changed the scenario in which advancing towards decarbonization and environmental sustainability continues to be a grand goal, but no one now knows how to achieve it. This week, the Bank of Spain once again showed the convenience of targeting a range of environmental taxes that help reduce the deficit that Spain is part of in the ongoing energy transition, but tax experts have already warned that this feat includes touching the taxes levied. on fuel, gas, water use, aggregates and even fine drivers for traffic jams in the centers of large cities, among many other measures, something that is closer to a song in the sun than to a real version of public administration in the medium term.

The Bank of Spain itself currently recognizes the counter-cyclical nature of its proposal, but this does not mean that a complete renewal – quantitative and qualitative – of what is understood in Spain as “green” taxation is not necessary and should be taken into account when the water calms down and raise taxes on diesel fuel or plane tickets cannot be seen as a social attack. From the outset, the experts convened by the Treasury to prepare a white paper on tax reform have devoted more than a hundred pages to green taxation with far-reaching proposals both to introduce additional taxes and to eliminate obsolete or unreasonable ones.

Although it is currently minimized by rising electricity prices, it must be remembered that the Tax on Electricity generation cost (IVPEE) was created to make up for the shortfall in the rate, which has now been closed, as well as Special tax on electricity (IEE), also temporarily annulled by the war, was created to offset charges for pollutant emissions from coal mining 24 years ago, although it was already set up as a cost of production. Just eliminating the former and reducing the latter would cost the state treasury 2,700 million euros, which must be offset by the creation of other tax indicators justified by their contribution to the preservation of the environment and much more. according to the current lifestyle.

There is a commitment in academia to a complete renewal of this type of tax along the lines of “polluter pays,” but with the added warning that applying this axiom literally in a changing moment, such as the current one, could be a blow to the competitiveness of many companies. Taxation experts such as Prof. Alfonso Garcia Monco warn that the current increase in energy taxes proposed in the White Paper has lost all meaning, especially because if we analyze its effectiveness from an environmental point of view, zero results. “Until now, their only function is to collect, and they remain as sacred taxes that grow every year and serve to promote ecological transition or something like that,” he warns.

Montero’s own experts warn of the need to reorder the tax authority, which can account for more than 40% of what a taxpayer pays each year (electricity, water, gas, fuel, vehicle fees, road use, etc.), but whose the total fee is barely 1.7% of GDP, compared to 2.7% on average in Europe. The energy crisis that erupted in Europe due to the conflict with Russia even led to a proposal to reduce the special tax on hydrocarbons paid in Spain on gasoline and diesel, which was ruled out because it was already the minimum for the entire EU. It was proposed to match the €0.37 per liter that is paid for diesel with the €0.47 for gasoline, but this option was ruled out due to opposition from some nationalist parties such as PNV and the hit it could mean for the treasury. standalone, given that it is a tribute given to the CCAA.

With gasoline and diesel subsidized at the present time and oil prices rising, it is unthinkable to apply an increase in taxation of hydrocarbons until the end of the war and its consequences, that is, at least until the next legislative assembly, although it would be in this area where in the new green tax system, a larger increase in tax revenues could be obtained. (from 2,600 to 6,800 million euros). The narrowness of these limits leaves all options for reforming green taxes to increasing the rates of payments for mechanical tractors (the letter of the car), which are usually regulated by municipalities and which can be measured by what is polluted. not the fiscal power that every car has. Other areas of application could be canons for water extraction, aggregate production, and even measures governing the management of solid municipal or other waste, which would allow the core concepts of the circular economy to be included in the definition of taxable activities.

return profit

Green taxation has also recently come under scrutiny by the Professional Association of State Treasury Inspectors, although this is currently not an area where there is much conflict, given that most of these are production-related taxes. Its president, Julio Rances Pérez, also warns of the need apply a downward change to the entire systemso the rationale is consistent with the goals of the ecological transition, and although it is necessary to wait to be able to apply the planned innovations until at least 2030. From his point of view, it is important to act with greater harmonization and revision of the measures applied in different administrations (autonomous, state and local) in order to avoid comparative grievances and illogical dysfunctions.

On the part of the inspectors, the biggest problem arises not so much with green taxes, which have yet to be done, but with punctual application of VAT at many wholesale gas stations, especially when they find especially low fuel prices in the face of the crisis and subsidies. On the other hand, inspectors warn that the new green tax system should be used in such a way that its revenues are returned to users and companies with lower incomes or those most affected by the energy crisis. “Provide direct assistance to low-income people who cannot afford fuel or energy costs, provide recharging infrastructure in the most disadvantaged areas, or redirect excess income to develop the renewable energy industry,” are proposals that remain on the table until those until in Spain we can talk about them. reforming environmental taxation and raising its rates without going against the times.


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