Spain seeks to tax lenders for windfall profits

Bloomberg

Spain is seeking to tax banks for windfall profits made from net interest and fees charged to clients, in the boldest move against lenders by any major
European Union nation to offset the impact of a worsening
cost-of-living crisis.
A bill introduced to parliament aims to set a 4.8% tax on Spanish banks. It also seeks to charge a 1.2% levy on the domestic sales of energy firms. The measures, put forward by parties of the ruling coalition, would also penalise companies that pass the costs of the new taxes on to their clients.
The details of the proposals put an end to more than two weeks of uncertainty over the government’s plans, initially outlined by Prime Minister Pedro Sanchez on July 12. Now the administration, which aims for approval later this year, will have to negotiate with a wide group of congressional allies to pass the bill in the splintered parliament, where no party has a majority.
The government has struggled in recent months to gather support to pass significant legislation, but it has never lost a major vote. That track record indicates that it will likely clinch enough backing for the windfall taxes.
The levies, which aim to raise 7 billion euros ($7.1 billion) over the next two years, have raised tensions between Sanchez and big business as governments across Europe scramble to raise funds to ease the impact of record inflation exacerbated by Russia’s invasion of Ukraine.
Spanish banks were among the worst performers in Europe on Thursday prior to the announcement of the bill. Banco Santander SA and Banco Sabadell SA had reported earnings earlier. They remained mostly unchanged after the bills were introduced.
Many people and companies “are suffering the consequences of the crisis, of the war” but others “are obtaining extraordinary profits,” said Patxi Lopez, leader of the Socialist party in the Congress. The proposals ensure that banks and energy firms “contribute part of those profits” to common welfare.