Spain to Introduce 6% Tax on All Domestic Energy Production

Spain is still struggling in the aftermath of the 2008 property market crash, and has just recently accepted a 100 million euros rescue loan to help save its banks.

Spanish Prime Minister Mariano Rajoy’s conservative government has been raising taxes and cutting its spending ever since it took power in December, in the hope of saving the Mediterranean nation from a serious default, and avoiding a full blown financial bailout.

The latest move is one that will see all forms of domestic energy production, both renewable and non-renewable, have to pay a six percent tax. It is intended that this tax will help reduce the blow of the accumulating tariff deficit, the difference between what the energy costs to produce, and what the end consumer actually pays. By December 2011, the accumulated deficit had reached 24 billion euros ($31.5 billion).

Without this tax the Ministry of Industry, Energy and Tourism says that the tariff deficit would continue to grow at a rate of 5 billion euros a year, and by 2015 it would be more than double the 2011 numbers. They also hope that this tax will stimulate developments in energy efficiency in Spain.

Not surprisingly members of the energy sector are not happy, and new energy technologies are worried that the tax could see them struggle to remain profitable. Rocío Sicre, the chairman of the wind energy group in Spain, said that, “it seems that the government is considering measures that could be the final blow for wind energy.”

By. Joao Peixe of Oilprice.com