He admits that the lowest incomes will be affected by this change and calls for measures to compensate them
The Bank of Spain considers it “essential” to increase environmental taxes in Spain so that the economy can progress efficiently and at a lower cost in the ecological transition process, and states that increasing tax collection in this area can be used to support other to reduce taxes and to offset the transition costs of the most vulnerable companies and households. Because these groups – recognize the attitude – are most affected by this whole energy process.
Esupervisor emphasizes that public policy, especially in the field of taxation and the regulation of economic activity, must play a “leading role” in the ecological transition. This is indicated in a chapter on climate change in the annual report, the
The Director-General of the Economy and Statistics of the Bank of Spain, Ángel Gavilán, has indicated that the main tool that governments should use is environmental taxes, an area in which Spain “has a long way to go” as it is part of the group of EU-27 economies in the countries with the lowest relative environmental tax collection, with a difference of almost one percentage point from the average of the last two decades. In 2019, the negative difference in Spain was 0.8 points, 67% due to lower taxes on energy and in particular on hydrocarbons.
“Environmental taxation is the key to the ecological transition. Progress needs to be made in this area, environmental pressures need to be redesigned and optimised,” stressed Gavilán, pointing out that the White Paper on tax reform published last March is a starting point for assessing a possible comprehensive review of environmental taxes. in Spain.
According to Gavilán, increased environmental collection could reduce the tax distortions caused by other taxes in the economy. “If, while you increase the environmental tax, which allows you to collect more money, but also lower the taxes on labour, which are highly disruptive, you can have a positive impact on the activity,” explains the general manager of Economics and Statistics. from.
The government has been working on this message of increasing tax collection via the ‘green’ route for several years, but it has not yet taken any concrete and general measures. One of these measures is the increase in the price of diesel to make it fiscally equivalent to petrol. Now the hydrocarbon tax levied on diesel is up to ten cents lower than on petrol, although the price in the international market has increased the cost in recent weeks.
On the other hand, the report of the tax experts on behalf of the Treasury argued in favor of increasing transport taxes, including the purchase and ownership of vehicles; aviation for the use of polluting fuels; a conversion of the registration and motor vehicle tax and other similar figures. In any case, given the current crisis situation caused by the war in Ukraine, the Ministry of Finance has already anticipated that it will not implement these measures, which have been suspended.
The latest initiative launched is the Special Tax on non-reusable plastic containers and the Tax on the dumping of waste in landfills, incineration and co-incineration of waste, which will come into effect on January 1, 2023.
On the other hand, the Bank of Spain has warned that the impact of physical and transition risks, with the foreseeable rise in the price of the most polluting goods and services, will be more pronounced for lower-income households, those whose head of the family between 35 and 45 years old, people living in rural areas, people with a lower level of education and people with a larger number of members.
As for companies, if the price of emission allowances were to increase in the same way as in recent years (from 25 euros to 100 euros per tonne of CO2 between 2019 and February 2022), the worst affected sectors, after energy, would be other non-metallic mineral products. , air transport and paper.
Moreover, if a generalization of the system’s coverage were added, behind the energy sector, the transport sector (maritime, air and land) and the agricultural, livestock and fisheries sectors would be more affected. Likewise, smaller companies would be more affected than larger ones.
The Bank of Spain believes that it would be useful for public policy to establish mechanisms to compensate, on a temporary basis, the most vulnerable households and businesses. “For reasons of fairness, because they are not at fault and we need to help them make this transition more sustainable in the short term, and for reasons of efficiency, because if the groups most affected by the ecological transition don’t support this process, it will not be if it will produce with the speed and intensity necessary to be efficient,” Gavilán warned.
In this regard, the Bank of Spain indicates that part of the increase in revenues from higher environmental taxes could be used to take compensatory measures that reduce the costs of the ecological transition for the most vulnerable households and companies.
In addition to discouraging the most environmentally damaging activities through environmental taxes, the Bank of Spain has emphasized that fiscal policy should also play a fundamental role in promoting the large volume of investment needed to facilitate the transition and deems it “desirable also encourage private companies to invest in green technologies through grants.
The regulator also proposes regulatory interventions by governments to promote the ecological transition, such as initiatives setting air quality targets, energy performance standards in the promotion and renovation of buildings, standards required by certain standards in automotive manufacturing and the targets of penetration of renewable energy sources in electrical power generation.
In any case, in this context of an “extremely uncertain” structural transformation process, the Bank of Spain considers it essential that public policies provide “certainty” to the different economic actors and promote a stable operational framework in which they can adapt their consumption, investment and production decisions with maximum guarantees.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
