By Andreas Rinke
BERLIN, April 4 (Reuters) – Five European Union countries are calling for a windfall tax on energy companies’ profits in reaction to rising fuel prices due to the Iran war, according to a letter from finance ministers to the EU Commission seen by Reuters on Saturday.
The finance ministers of Germany, Italy, Spain, Portugal and Austria made the joint call for an EU-wide tax in a letter dated Friday. Such a measure could help fund relief for consumers in the face of high energy prices and be a signal that “we stand united and are able to take action”, they said.
“It would make it possible to finance temporary relief, especially for consumers, and curb rising inflation, without placing additional burdens on public budgets,” the ministers wrote.
“It would also send a clear message that those who profit from the consequences of the war must do their part to ease the burden on the general public,” they said.
Oil and gas prices have spiked since the U.S.-Israeli strikes on Iran began on February 28, creating a price shock similar to the energy crisis Europe went through after Russia invaded Ukraine in 2022 – even though EU countries are now getting more energy from renewable sources.
LETTER HIGHLIGHTS ‘MARKET DISTORTIONS’
In the letter, addressed to EU Climate Commissioner Wopke Hoekstra, the ministers pointed to a similar emergency tax in 2022 to address high energy prices.
“Given the current market distortions and fiscal constraints, the European Commission should swiftly develop a similar EU-wide contribution instrument grounded on a solid legal basis,” they wrote.
A spokesperson for the EU Commission confirmed it had received the letter and that it was assessing it.
“More generally, the Commission is working closely with member states on possible targeted policy measures in response to the current energy crisis facing Europe,” the spokesperson said.
The letter gave no details of what level of windfall tax the ministers were proposing, or on which companies it should fall.
The German Fuel and Energy Association, which represents refineries and petrol stations, said that the impression that companies were unjustifiably profiting was inaccurate and that there was no justification for a windfall tax.
“Our primary goal is to maintain the supply of fuels and motor fuels in Germany under increasingly difficult conditions,” it said in an emailed statement.
The bloc’s energy chief said on Tuesday it was considering reviving energy crisis measures used in 2022, including proposals to curb grid tariffs and taxes on electricity.
The EU introduced a suite of emergency policies in 2022, after Russia cut gas deliveries. They included an EU-wide cap on gas prices, a tax on energy companies’ windfall profits, and targets to curb gas demand.
Europe’s heavy reliance on imported fuel leaves it exposed to the Middle East conflict’s impact on global energy prices. European gas prices have risen more than 70% since the U.S.-Israeli war with Iran began on February 28.
EU Energy Commissioner Dan Jorgensen said Brussels was particularly concerned in the short term about Europe’s supply of refined petroleum products such as jet fuel and diesel.
(Reporting by Andreas Rinke; Writing by Tom Sims; Additional reporting by Foo Yun Chee in Brussels; Editing by Alison Williams and Susan Fenton)
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