Berlin: Finance ministers from six European Union countries have renewed their call for a bloc-wide excess profit tax on oil companies, amid the ongoing surge in fuel prices, as reported by German broadcaster NTV. The ministers from Germany, Portugal, Spain, Austria, Italy, and Poland argue that a unified approach is essential to address the increased profits of oil companies during the current energy crisis.
According to Anadolu Agency, the ministers have expressed their concerns in a letter directed to Ireland's finance minister, whose nation currently presides over the rotating EU Council. They emphasized the unprecedented supply shock being experienced globally and the dissatisfaction stemming from the rising cost of living. The letter criticized existing governmental measures as inadequate in providing long-term solutions to stabilize or reduce energy prices for both households and businesses.
The ministers highlighted the necessity for a coordinated strategy to ensure that companies benefiting from the ongoing crisis contribute fairly to alleviating the financial burdens faced by the general populace. They are advocating for the establishment of an EU-wide framework to tax excess profits, drawing lessons from a similar initiative implemented in 2022. These lessons could improve the inclusion of international profits from multinational oil firms in the tax structure.
Furthermore, the ministers urged that the findings of a European investigation into refinery margins be published promptly, as they could guide measures to prevent refineries from taking advantage of the current energy situation. This renewed initiative, spearheaded by German Finance Minister Lars Klingbeil, aims to feature this topic in the upcoming EU economic and finance ministers' meeting in Dublin, set for September 18-19.
The call for action coincides with increasing pressure on European governments to mitigate the impact of high fuel prices on citizens and businesses. In 2022, an excess profit tax was temporarily enacted as an emergency response to the skyrocketing energy prices caused by the war in Ukraine, targeting the extraordinary profits of energy companies.
The financial results of several major oil companies were released in July, revealing significant earnings. Oxfam reported that BP, Chevron, Eni, ExxonMobil, Shell, and TotalEnergies collectively amassed nearly £40 billion ($46.6 billion) in profits between April and June. Oxfam projects that these companies might achieve combined profits of £147 billion ($171.2 billion) for the entire year and advocates for a permanent excess profit tax of no less than 50% on profits exceeding a 10% return on investment.
In a related move, Portugal introduced a draft excess profit tax proposal in late July, intending to use the generated revenues to support families and economic sectors affected by the escalating fuel prices.