The Bank of Spain considers the incentive and improvement “necessary”. environmental taxation In our country He argues that so the economy can move forward efficiently and at lower costs in the ecological transition, and that income growth in this area can be used to reduce other taxes and offset the transition costs of the most vulnerable companies and families.
In a section on climate change in its Annual Report, the supervisor emphasizes: It is public policies, particularly in fiscal matters and the regulation of economic activities, that should play a “leading role” in the ecological transition.
This is given so that governments and parliaments have the necessary legitimacy to determine the times and path by which the economy and society must undergo structural transformation and have “broader, more detailed and adequate” means to achieve the proposed goals. the most efficient way.
Ángel Gavilan, Director General of Economy and Statistics of the Bank of Spain, stated that the main tool that governments should use is environmental taxation. Spain “has a long way to go” as it is in the group of EU-27 economies with the relatively lowest environmental taxationl, with a gap of almost 1 percentage point compared to the average for the past two decades.
According to the news of Europa Press, the negative difference in Spain in 2019 was 0.8 percentage points, 67 percent due to the reduction of taxes on energy and especially hydrocarbons.
Redesign taxation and reduce other taxes
“Environmental taxation is the key to the ecological transition. Progress must be made in this area, we must redesign and optimize environmental taxation”Gavilán insisted, pointing out that the White Paper on Tax Reform, published last March, is a starting point for considering a possible comprehensive review of environmental taxation in Spain.
According to Gavilan, More environmental collections could make it possible to reduce tax distortions created by other taxes in the economy. “You can have a positive impact on operations if you also increase environmental taxes, which allows you to raise more money, but reduce labor taxes, which are quite skewed,” said the Director General of Economics and Statistics.
On the other hand, the Bank of Spain warned of the impact of physical and transit risks. predictable rise in the prices of the most polluting goods and serviceswill be heterogeneous across sectors, companies and households.
In the case of families, the effect will be more pronounced on lower income households, the head of the household aged 35-45, rural residents, those with a lower education level, and those with household heads. more members.
As for companies, the Bank of Spain’s CATS model shows that if the price of emission rights increases in a similar way to last years (from €25 to €100 per tonne CO2 between 2019 and February 2022), the sectors most affected after energy other non-metallic mineral products will be air freight and paper.
In addition, if the generalization of the scope of the system is added, the transportation sector (sea, air and land) and agriculture, livestock and fishery sectors will be more affected after the energy sector. Likewise, small companies will be more affected than large companies.
The Bank of Spain believes It would be appropriate for public policies to establish mechanisms to temporarily compensate the most vulnerable households and companies.
“For fairness reasons, because they are not criminals, and we need to help make this transition more permanent in the short term, and for efficiency reasons, because if the groups most affected by the ecological transition don’t support this process, it won’t be whether it can produce at the speed and intensity needed to be productive,” Gavilan warned.
In this context, the Bank of Spain states that some of the revenue growth from more environmental taxation can be used to take compensatory measures that reduce the costs of the ecological transition for the most vulnerable households and companies.
Get funding for the ecological transition
In addition to deterring the most environmentally damaging activities through environmental taxation, the Bank of Spain stressed that fiscal policy should also play an important role. encouragement of the large-volume investments necessary to facilitate the transition and to encourage private investment in green technologies through subsidies.
The supervisor also sets out initiatives that set air quality targets, energy performance standards in the promotion and renovation of buildings, standards required by certain standards in automobile manufacturing, and targets for the penetration of renewable energy sources in electrical power generation.
The Bank of Spain report also highlights: Active participation of the financial sector is essential to tackling climate change and mobilizing the enormous resources required by the ecological transition..
“To fulfill this task efficiently, it is important that all participants in the financial system and capital markets are able to accurately determine the degree to which they and the rest of the economic entities are exposed to different physical and environmental security risks. climate change-related transition and risk this information. actively involved in its management”.
In matters of regulation and prudence, the Bank of Spain recalls that it works to ensure that credit institutions are prepared to identify, measure, manage and adequately report financial risks associated with climate change that contribute to the ecological transition.
The banking sector is exposed to risks from climate change and ecological transition, mainly through loans to productive activities. In any case, the Bank of Spain’s ‘top-down’ analysis shows a modest impact of climate risks on the Spanish banking sector in the short term.
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Environment department contact address:[email protected]
Source: Informacion
