Six EU Countries Push for EU-Wide Windfall Tax on Oil Companies
Six European Union countries are intensifying their push for a bloc-wide windfall tax on oil companies, citing surging profits linked to the war in the Middle East. In a letter sent to Irish Finance Minister Simon Harris, the finance ministers of Germany, Austria, Poland, Portugal, and Italy, along with Spain's economy minister, urged that the issue be placed on the agenda "as soon as possible" for the next meeting of EU finance chiefs, scheduled for September 18-19 in Dublin.
The letter, dated August 21 and seen by Bloomberg, argues that "oil companies are enjoying overall profitability and margins on refined products that exceed the rise in crude oil prices." It adds that Europe is "experiencing one of the biggest supply shocks in decades, and all over the world there is growing discontent about the rise in the cost of living."
The signatories call for an "EU-wide framework to tax windfall profits," drawing on lessons learned from a temporary levy introduced in 2022 following Russia's invasion of Ukraine. They also request that the results of a European investigation into refiners' margins be made available as soon as possible, to ensure refineries are not taking advantage of the current energy price spike.
Context: War in Iran and Energy Price Surge
The push comes amid sharply rising energy prices. Oil prices have risen about 25% since the outbreak of the US-Israeli war on Iran on February 28, while diesel prices have surged more than 70% and gasoline prices have climbed around 20%, according to figures cited in the letter.
Energy companies have posted massive earnings since the US and Israel launched military operations against Iran in February, disrupting shipping through the Strait of Hormuz, a vital transit route for global oil supplies. The letter argues that "government measures taken so far have not been sufficient to reduce or stabilise prices for businesses and citizens on a permanent basis," and that a common approach is needed to ensure "those who are profiting from the crisis do their part to ease the burden on the general public."
Political Divisions in Germany
The proposal has exposed divisions within Germany's ruling coalition. German Finance Minister Lars Klingbeil of the centre-left SPD has repeatedly argued that energy firms must not exploit consumers during the current turmoil. A ministry source told Euronews and AFP that "excessive crisis profits must be returned to consumers."
However, Chancellor Friedrich Merz's centre-right CDU opposes the measure. The SPD is the junior partner in the ruling coalition, and the disagreement highlights the political challenges facing the proposal.
Outlook: No EU Signal Yet
Several of the signatory countries had already advocated for a tax on oil company profits earlier this year. Despite the renewed pressure, the EU has not yet signalled plans to introduce a new levy on oil companies.
The letter, also seen by Euronews and AFP, comes as the rotating presidency holder Ireland prepares to host the finance ministers' meeting. Whether the windfall tax will make it onto the formal agenda remains to be seen.