The Government resorts to the 'Draghi model' to collect 2,000 million from the profits that fell from the sky of the electric companies

The Government resorts to the 'Draghi model' to collect 2,000 million from the profits that fell from the sky of the electric companies

The Government is cautious about the details of the new taxes announced by the president, Pedro Sánchez, for banking and energy companies during the debate on the State of the Nation. Although, he has already pointed out the example that guides them to design the taxation with which they intend to collect from the extraordinary profits of the electricity, gas and oil companies due to the rise in prices. The so-called benefits fell from the sky have become the objective of the different European governments to cover the costs of the aid plans against inflation. The minority partner of the coalition, United We Can, has also been calling for it for several months.

The tax will begin to be applied, according to the Government's forecast, to the benefit of 2022. Although, the price increase dates back to 2021, months before the war in Ukraine, and the electricity companies already reaped important results last year. Iberdrola, Endesa and Naturgy, the three main companies in the sector, signed up in 2021 a joint profit of 6,533 million euros, the highest since 2014. It was 40% more than the profits of 2020, when one of those three companies, Naturgy, registered losses of more than 300 million due to an accounting adjustment of the value of its assets. Repsol, another of the companies that would be affected by the tax announced by Sánchez, earned 2.4 billion last year alone, three times more than in 2020 and 20% more than in 2019, before the pandemic.

The 'Draghi model', announced in March, is on the way to becoming the path to be followed by the Spanish Executive. This was confirmed this Wednesday by the Third Vice President and Minister of Ecological Transition, Teresa Ribera. "The tax that Draghi has designed is interesting as an inspiration", defended in an interview on Onda Cero, although he was cautious about the specific details. Sánchez had advanced that the objective is for this tax to contribute 2,000 million euros per year during the two years in which it would be in force.

What is the 'Draghi model'? The Italian tax for electricity companies was announced in March as a way to finance support plans for families and companies to offset rising prices. The executive's idea was to create a temporary tax that would tax the extraordinary benefits that the country's energy companies had had due to the rise in prices since October of last year. The Transalpine Government plans to make a difference between the benefit obtained in that period compared to that of the same companies a year earlier. On that difference he applied 10%. Later, he announced a 15% add-on. In other words, 25% of that extra profit will revert to public coffers thanks to the tax.

Italy was one of the first countries to apply this measure and, for this reason, it has served others as a reference. According to the Italian Government, the income for the State will be around 11,000 million euros there. The idea had already been defended by organizations such as the OECD, which justified the existence of extraordinary taxes for these benefitsor by the European Commission, which indicated them as a measure to mitigate energy prices: "The Commission also confirms that Member States may consider temporary tax measures on windfall profits and, exceptionally, decide to capture a part of these returns to redistribute them among consumers." Draghi, not at all suspicious of belonging to the family of the European left, gave this step to other governments to justify their decisions aimed at taxing energy companies.

The Government has pointed to a second example in recent hours to support its announcement: Belgium. Sánchez has hidden behind the announcement made this week by the Belgian government, led by the Flemish Liberals, to show that a tax on energy companies is by no means an exception on the continent. The President of the Government went to this example on several occasions this Wednesday to request the support of Citizens for this law, something that Inés Arrimadas has ruled out.

The Belgian government first requested the approval of the regulators to be able to impose this tax. After receiving it, the country's Minister of Energy, Tinne Van der Straeten, defended this Tuesday the creation of a tax that would tax 25% of excess profits that fell from the sky. As in Spain, the tax will affect electricity, gas and oil companies. At the moment, it is planned for this year and the results will be analyzed quarterly. The idea is that the tax is applied on the difference of the company's gross margins from last year compared to this one. To calculate it, the VAT declarations presented by the companies will be taken as a reference. The tax will be activated if the profit margin has increased by more than 100,000 euros and by more than 10% in a single period.

a similar tax it has also been approved in recent days in the UK. In this case, legislators have approved a rule, which must be definitively endorsed by the chambers, by which a 25% tax will be applied on extraordinary profits for oil and gas producers in the North Sea. With this measure, it is estimated that some 5,900 million euros could be raised. It was the conservative government of Boris Johnson that put this measure on the table last May and has now completed one more parliamentary process, in the absence of the lords.

The details that are known regarding the Spanish tax are still scarce. Ribera explained this Wednesday that it is about taxing the difference in benefits with the same level of income. That is, how much have profits increased with similar consumption. "That's where windfall profits are shown to us," he said. Ribera has indicated that it is the Ministry of Finance that is outlining the details of this tax and that it will be presented "in the coming weeks."

Yes, the estimate of income is known, which Sánchez advanced that it will be 2,000 million annually. It will be valid for two years, this and the next. The President of the Government already announced this tribute, a demand from his government partners, last June when he presented the second royal decree of measures against the inflation crisis. This rule will be approved this week in Congress, but the new tax will have an independent process, like the one announced for banking. The route will be that of the bill in Congress presented by the parliamentary groups that make up the Executive. In this way, it is expected that they can have legal support that avoids the resources of the electricity companies and that it arrives in time to tax the benefits obtained in this exercise.

Although the estimate exists, the Government has not yet advanced exactly how the tax base will be calculated and what will be the rate that will be applied. "We are working on the format and the general lines," Ribera said on Wednesday. The vice president defended that the electric companies have to have a greater contribution in this context. "It is not reasonable to allow the profits of some companies to increase exponentially without this representing an increase in costs and that we citizens are the ones who contribute to those profits", she defended. The vice president has ruled out that this tax will affect the reinvestment that energy companies must make in their systems and infrastructures. "We have to design it so that this doesn't happen," she said. "More than increasing profits and dividends, they should work on price containment. Their clients are having a hard time," she emphasized.

Both banks and energy companies have rejected the creation of new taxes in Spain, despite the fact that in the case of energy there are already other similar taxes in Europe. The former socialist councilor in Madrid and current vice president of Iberdrola Spain, Antonio Miguel Carmona, declared this Wednesday that he considers that this tax will be limited only to gas and oil companies, despite the fact that Sánchez also included electric companies in his speech. "We understand that this tax is for the oil and gas companies that represent 75% of the energy. We, on the contrary, have a cut in results in Spain due to the increase in gas prices and having 80% of the electricity demand sold at a fixed price," he assured.

The oil companies have also revolted at this tax and have denied the existence of extraordinary benefits. Sources from the employers' association, the AOP, told Europa Press on Wednesday that "one cannot speak of extraordinary profits" and that "the margins are cyclical and in 2020 there were losses of billions." The reality is that the International Energy Agency itself detected "enormous 'benefits from heaven' for electricity companies from gas": "Current market conditions could lead to excess profits of more than 200,000 million euros in the EU," the agency said.

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