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Spain to implement 6 percent tax on power generation revenue

The Spanish cabinet approved a proposal to impose a 6 percent tax on all energy production in the country – both from renewable and non-renewable sources – to make up for its accumulated tariff deficit.

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The tariff deficit, the difference between the actual cost of energy and what the consumer pays, has reportedly reached 24 billion euros in Spain ($31.5 billion) in December 2011 largely due to subsidies for renewable energy production.

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Inaction would mean the government would lose 5 billion euros more every year, and by 2015 the deficit could be double the 2011 numbers.

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The Ministry of Industry, Energy and Tourism says the move would serve as a stimulus to improve energy efficiency in Spain.

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The tax, which also covers the production and storage of nuclear waste, is expected to bring in 2.7 billion euros ($3.5 billion) to the economy.

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The collected funding aims to limit the increase in the power tariff deficit to at least 1.5 billion euros.

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Taxes include 2,190 euros per kilogram of radioactive waste resulting from nuclear power production, a tax rate of 22 percent of the economic value produced by hydropower, and different rates for natural gas, coal, fuel oil and diesel.

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But the Spanish Wind Energy Association said these measures should have been pre-negotiated with the industry as they say the measure will place an impact of 241 million euros in 2013, particularly with wind power.

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“It seems that the government is considering measures that could be the final blow for wind energy,” said Rocío Sicre, chairman of the wind energy group.

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Spanish Prime Minister Mariano Rajoy’s conservative government is reported to have been raising taxes and cutting spending since his party assumed power in December to “put the country's finances in order” and avoid the need for a full-blown financial bailout.

The government recently accepted a Eurozone rescue loan of up to 100 billion euros to save banks still reeling from a 2008 property market crash. It also plans to lower Spain’s deficit from 8.9 percent last year to 6.3 percent this year. – EcoSeed Staff

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