Spain's windfall tax proposal clears hurdle in parliament

Spain's windfall tax proposal clears hurdle in parliament

MADRID Reuters - An amended windfall tax proposal for Spanish banks and large energy companies cleared its first hurdle in parliament in the early hours of Friday with the backing of the leftist ruling coalition and several regional parties.

Some parties in the northern regions of Spain, where energy companies and banks have a significant presence, had already secured an exemption from large energy firms' domestic regulated activities and foreign operations before the vote.

Several energy companies threatened to take the government to court if the 1.2% levy on power utilities' sales was approved in its original form.

In 2023 and 2024, taxes were aimed at raising 7 billion euro to help households cope with cost-of-living pressures.

The proposal, passed by 186 votes in favor and 152 against with 10 abstaining, will now be sent to the Senate where it could be approved if the upper house doesn't add any amendments.

The lower house or Congress would have to debate it if parties in the Senate introduced additional changes.

The European Central Bank warned earlier this month that the proposal could cause market competition to be disrupted and affect a level playing field, and the banking tax was amended to impose levies on local units of foreign lenders.