Hasty cutback measures that the government has enacted in its short time in office have have left many question marks -- and not a few disagreements. One of the latest is a spat between Minister of Finance Cristóbal Montoro and Minister of Industry José Manuel Soria about a power sector reform that should be approved today by the Cabinet. But will the bickering delay it?
The squabble between the two ministers concerns taxes on thermosolar energy. According to initial drafts of the reform, these taxes will be 13%. While Montoro is fighting tooth and nail to keep taxes low in this subsector, Soria is pushing for a heavier tax burden in hopes of balancing the tariff deficit.
Thermosolar has not only been a way to grant feed-in tariffs to friends, but has also become one of the biggest problems in the power sector. If new plant construction projects materialize in 2013, then the deficit will go up by 2 billion euros. Soria should stand by his plans and defend a balanced dispersal of the tax burden, turning a blind eye to strong pressures from the fourteen investment funds that have vested interests in the thermosolar business.
By law, the power sector must clean up its debt in 2013. In doing so, it will have to pay down a mountain of debt that has built up since 2002. At year end, it could amount to 29 billion euros, around 3% of Spain?s GDP. A debt load like this is hard to overlook or excuse.
