The Spanish government is proposing a reduction in the amount of the so-called telco tax in an attempt to see off plans by the European Commission to take the country before the European Court.
The current rate of 0.9% on companies including Telefónica, Vodafone and ONO was expected to bring in €230 million to make up the shortfall following the withdrawal of advertising from public broadcaster RTVE.
Presidency minister Ramón Jáuregui, in Brussels to discuss the issue with Commissioner Neelie Kroes, argues the tax is required because the telcos have benefitted from the abolition of advertising on RTVE as well as from other changes in the market.
Even though Spain is prepared to reduce the amount of the tax, the government is still seeking to maintain the same revenue levels. The alternatives being to increase the Spanish TV licence fee, transmission fees or state grant, any one of which would also be likely to need EC approval or to extend the telco tax to additional countries.
