Five EU countries call for a windfall tax on energy companies

Five EU countries’ finance ministers wrote to the European Commission, calling for a windfall tax on the profits of energy companies to deal with fuel price increases caused by the war in Iran.

In a letter dated Friday, the finance ministers from Germany, Italy, Spain, Portugal, and Austria jointly called for taxes across the EU. They said the measure would help provide relief funding for consumers amid high energy prices, and would also be a signal showing that “we are united and can take action.”

“The ministers wrote in the letter:” This could make it possible to fund temporary relief (especially for consumer relief) without placing an additional burden on public budgets, and to curb ever-rising inflation.

They said: ”This will also send a clear message that those who profit from the consequences of the war must do their part to ease the burden on ordinary people.”

Since Feb. 28, when the United States and Israel began strikes against Iran, oil and natural gas prices have surged, creating a price shock similar to the energy crisis Europe experienced after Russia’s invasion of Ukraine in 2022, even though EU countries are now getting more of their energy from renewables.

The letter emphasized “market distortions

In a letter to EU climate commissioner Hoekstra, the ministers pointed out that in 2022, similar emergency taxes would be imposed to address the problem of high energy prices.

“They wrote in the letter:” Given the current market distortions and fiscal constraints, the European Commission should, on a solid legal basis, quickly develop a similar EU-wide contribution tool.

The letter did not specify the windfall tax rate proposed by the ministers, nor did it say which companies should be subject to the windfall tax.

** The German Fuel and Energy Association, representing refineries and gas stations, said the impression that companies are profiting improperly is inaccurate, and there is no reason to impose a windfall tax. **

In an email statement, the association said: ”Our top priority is to maintain Germany’s fuel and motor fuel supply under increasingly difficult conditions.”

The group’s energy director said on Tuesday that it is considering reintroducing the energy-crisis measures used in 2022, including proposals to limit grid charges and electricity taxes.

After Russia cut natural gas supplies, the EU introduced a series of emergency policies in 2022. These policies included an EU-wide cap on gas prices, windfall taxes on energy companies, and targets to suppress demand for natural gas.

Europe’s heavy reliance on imported fuels leaves it vulnerable to the impact of Middle East conflict on global energy prices. Since Feb. 28, when the U.S. and Israel went to war with Iran, European natural gas prices have risen by more than 70%.

Jörgensen, EU energy commissioner, said Brussels is particularly concerned in the short term about the supply of refined petroleum products such as aviation fuel and diesel for Europe.

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