EU ministers to discuss taxing windfall profits of energy companies as oil prices surge

European Union finance ministers will discuss on Friday whether ​to impose an EU-wide windfall tax on energy companies benefiting ​from a surge in oil and gas prices ‌following ​the closure of the Strait of Hormuz, with further talks expected in October.

The debate was triggered in late August when the finance ministers of Germany, Spain, Portugal, Italy, Poland and ‌Austria warned that consumers were facing one of the biggest oil supply shocks in decades, fuelling voter discontent over rising living costs. Parliamentary elections are due next year in France, Italy, Spain, Poland, Greece, Finland, Slovakia and Estonia. Oil futures have climbed back above $100 a barrel, about ‌50% higher than before the Iran war, as escalating attacks across the Middle East threaten more supply routes. Derivatives markets suggest ‌traders do not expect a near-term drop in prices.

Arriving at a meeting of EU finance ministers in Dublin, German Finance Minister Lars Klingbeil called on the European Commission to propose ways to tax what he called excessive profits of oil companies. "The Commission has been very reserved on this issue, although several member states ⁠have been ​calling for models to be presented ⁠for a long time. This must happen by the next Ecofin (EU finance ministers) meeting in October at the latest, and today I will make that pressure ⁠clear again, also on behalf of the others," Klingbeil said.

"People in our countries can currently see how oil companies are exploiting the situation, overcharging ​people, and significantly increasing their profits. You can see that very clearly in their balance sheets .... If companies are overcharging in ⁠a situation like this, then we must pursue the matter consistently. That is my very clear expectation of the Commission: to present proposals now," he said. But EU ⁠Economic ​Commissioner Valdis Dombrovskis said the Commission had no plans for now to propose an EU-wide taxing mechanism, saying that EU countries were in charge of their taxes and free to do as they liked.

"We have been clear that, in a sense, that ⁠it is in the hands of member states. Member states can go ahead and take those decisions on taxing of windfall profits. ⁠And if necessary, the Commission side ⁠are certainly ready to engage in the discussions. At this stage, we are not putting forward an EU-wide proposal, but there is a possibility, certainly, for member states to proceed with this,” ‌Dombrovskis said.