Spain: PNV refuses to support extraordinary tax on energy companies

Reconciling the support of center-right nationalist parties, such as the Basque Nationalist Party (PNV) or Junts per Catalunya (the party of the fugitive Puigdemont), with that of extreme left parties (Podemos, Sumar…) was possible a year ago, to elevate Pedro Sánchez to the presidency of the Government despite having lost the elections. Spain has never had a weaker government, more willing to stay in power by making the necessary concessions to its various and diverse investiture partners.

However, in the day-to-day of the legislature, the conflicting interests of both sides subject the Government to a true legislative calvary and to impossible negotiations that often end in failure. This is the case of the special tax on energy companies, which parties like Sumar (coalition government partners) consider necessary to maintain, while PNV or Junts assert that they will not support it in its passage through Congress.

The Government is trying to square the circle, promising its extreme left partners that there will be a special tax on energy companies while assuring center-right nationalist parties that energy companies undergoing transitions towards net zero will be able to deduct their investments and minimize the tax’s impact on their accounts.

The large energy companies have played their cards by ensuring that the tax jeopardizes investments of billions of euros (Repsol alone plans to invest about €1.5 billion in its Tarragona plant) and have managed to get both PNV and Junts to stand firm against the Government, leaving the Government today without a majority to validate the decree it promised to Podemos, Esquerra Republicana de Catalunya, EH Bildu, and the Galician Nationalist Bloc (BNG).

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