Spain and five other European Union countries (Germany, Italy, Austria, Poland, and Portugal) insist on the need to establish an extraordinary tax on the profits of oil companies generated by the conflict in the Middle East. Thus, the Economy ministers of these six states plan to request it again by letter in a joint text addressed to Simon Harris, Deputy Prime Minister and Minister of Finance of the Government of Ireland, the country holding the rotating presidency of the EU, as confirmed by the Spanish Ministry of Economy led by Carlos Cuerpo, who appears as the signatory on behalf of Spain.
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In this letter, accessed by EL PAÍS, and revealed this Saturday by AFP and replicated by Euronews, the top economic officials of these countries demand that the reinstatement of this levy — similar to the one in effect in 2022 after the Russian invasion of Ukraine — be included on the agenda of the Ecofin meeting that the community Economy ministers will hold in Dublin on September 18 and 19.
Due to the Middle East conflict, the ministers signing this new letter state in their request: “Oil companies are enjoying high overall profitability and margins on refined products that, although they may be influenced by the shortage of certain products, exceed the increase in crude oil prices.”
Furthermore, they point out that “one of the greatest supply disruptions of recent decades is being experienced and, worldwide, discontent is growing over the rising cost of living.” They add that “the measures taken by governments so far have not been sufficient to permanently reduce or stabilize prices for businesses and citizens.”
For these reasons, these Finance ministers call on the EU to reopen a debate to “tax the extraordinary profits” currently being generated by oil companies. “We need a common approach that ensures those benefiting from the crisis also contribute to easing the burden borne by the general population,” they emphasize in the text.
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Updates for the new levy
This is not the first time Europe has applied such a levy. In fact, the signatories of the letter ask that “lessons learned” from the temporary tax model already applied by the EU in 2022 after Russia’s invasion of Ukraine be taken as an example. However, this time they add another request: that a “more specific analysis be carried out on how the profits obtained abroad by multinational oil companies can be more selectively included.”
They specifically demand “the development of a common European mechanism capable of protecting the single market and, at the same time, taking into account the diversity of national situations and their stakeholders, as well as compliance with the principle of subsidiarity.” To this end, they add that it is “essential” that community states access “as soon as possible” the results of the European investigation into the margins of refining companies to ensure that refineries are not taking advantage of the current energy situation.
A repeated request
This is also not the first time several community countries have made this request. Just over four months ago, last April, the Economy ministers of Spain, Germany, Italy, Austria, and Portugal formally requested the European Commission to create a new coordinated tax on the extraordinary profits of energy companies.
On that occasion, the heads of the Finance portfolios of the five European powers — now joined by Poland — urged the Commissioner for Climate, Net Zero Emissions, and Clean Growth, Wopke Hoekstra, to develop a solid legal framework to tax the unexpected incomes of the sector. The objective they pointed out then was the same as in the new letter: to prevent the cost of the energy crisis from falling exclusively on consumers and the public treasury.
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