Spanish election favorite Alberto Núñez Feijoa has vowed to scrap the windfall tax

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The conservative contender to become Spain’s next prime minister has vowed to scrap a €3bn windfall tax denounced by banks and energy companies, saying he wants to make it legally undeniable but making no commitment to repeal it. Not there.

Alberto Núñez Fizu, who is leading socialist incumbent Pedro Sánchez ahead of a general election this month, told the Financial Times the levy was “poorly designed” and needed revision. But his pledge to reform it is likely to disappoint businesses who had hoped he would scrap it altogether.

Feijoa, head of the People’s Party, has acknowledged that if elected he will face the difficult task of reducing Spain’s massive public debt burden, which will put pressure on him to cut government costs and generate additional tax revenue .

Sánchez introduced a windfall tax to divert “extraordinary” profits from business into a government initiative to deal with the cost of living crisis. But it has been scorned by major companies such as Santander, banks and power group Iberdrola, who are challenging it in the courts.

“We have to adjust to the legal risk we are taking,” Feiju argued, arguing that the levy was highly vulnerable to court challenges because it unusually applied to revenue as opposed to profits. “It’s not the right model.”

He pledged to “talk to power companies and banks about how we can ask for their solidarity and contribution to address the deep public debt and deficit.” , , before making a decision

Sánchez himself has used the language of solidarity, saying that businesses should do more to help citizens as banks profit from rising interest rates and energy companies profit from higher gas prices.

While the polls give a clear lead to Fizzou, they also suggest that the PP will fall short of an outright majority in parliament and can only govern with the support of the far-right Vox party.

Fizzoo has consistently stated that he does not want to form a coalition with Vox, a populist party that challenges the idea of ​​gender-based violence, dislikes multiculturalism and is skeptical about climate change. He said voters “must decide whether they want a strong government or, conversely, a coalition government with Vox”.

Nevertheless, the two parties have entered into coalition agreements at the local and regional level since the election in May. Some PP-Vox city governments have since stopped flying LGBT+ flags on public buildings. Sanchez reacted on Friday to a field agreement agreed, saying that “Spain goes backwards” when the pair govern together.

Whoever wins the election will have no option but to deal with the public finances of the country. Enforcement of the EU’s Stability and Growth Pact is set to resume next year after it was suspended due to the coronavirus pandemic, increasing pressure on member states to curb borrowing.

Spain’s public debt is 113 percent of GDP and its budget deficit last year was 4.8 percent of GDP.

The economic cost of the pandemic has increased the country’s debt load, but Feijo also accused Sánchez of allowing the public sector workforce to grow.

Promising to avoid cuts to public services, Feijoa said he would raise tax revenues by making Spain one of the fastest-growing economies in the European Union and increase employment – measured through the social security system – from the current 20.9 million. Will increase it to 22 million.

Spain’s economy grew 0.5 percent in the first quarter and was not among the eurozone’s top performers. Fizzou emphasized that Spain was one of the last EU economies to return to its pre-pandemic size.

Asked how he would achieve his economic goals, the PP leader said he would bring in more foreign investment with “specific fiscal policies to make Spain an attractive country”, including tax incentives for people moving there. also includes. He will also focus on consolidating Spain’s position as a renewable energy hub.

Feijoa has promised to cut income tax for those earning less than €40,000 a year – which is the majority of Spanish adults – saying that doing so would also boost economic growth.

Sánchez has been touting his success in attracting foreign investment and encouraging the development of renewable energy, while also stressing that employment has grown rapidly under his leadership. The prime minister has criticized Feijoo for running a negative campaign of attacks against “sanchismo” without offering a comprehensive plan for the country.

The Sánchez government has said the windfall tax will generate €3 billion in revenue this year. Fizzou acknowledged that the amount would be useful, but added that it would be even more valuable “if it was devoted to reducing the public debt, and not spent”.