EU Finance Ministers Demand Windfall Tax On Energy Firms

Five European Union finance ministers have jointly called for a windfall tax on energy companies to help cushion the impact of rising fuel prices triggered by the ongoing conflict involving Iran.

The ministers from Germany, Italy, Spain, Portugal, and Austria made the demand in a letter dated Friday and addressed to the EU Commission. The letter was seen by Reuters on Saturday.

They argued that such a measure would demonstrate unity and the bloc’s ability to respond effectively to the crisis.

“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 wrote.

Oil and gas prices have surged since U.S.-Israeli strikes on Iran began on February 28, creating an energy price shock in Europe similar to the one experienced after Russia’s invasion of Ukraine in 2022.

This is happening even as EU countries increasingly rely on renewable energy sources.

In the letter sent to EU Climate Commissioner Wopke Hoekstra, the ministers highlighted “market distortions” caused by the price spikes and pointed to a similar emergency tax introduced in 2022 to tackle high energy costs.

“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.

The ministers did not specify the rate of the proposed windfall tax or which companies it would target.

The call comes as the EU’s energy chief indicated on Tuesday that Brussels is considering reviving some of the emergency measures used during the 2022 energy crisis.

These include proposals to limit grid tariffs and impose taxes on electricity.

During the 2022 crisis, triggered by Russia cutting gas supplies, the EU rolled out several emergency policies. These included a bloc-wide cap on gas prices, a windfall profits tax on energy companies, and targets to reduce gas demand.

Europe remains heavily dependent on imported fuel, making it vulnerable to global energy price fluctuations caused by the Middle East conflict.

European gas prices have climbed more than 70% since the U.S.-Israeli war with Iran started on February 28.

EU Energy Commissioner Dan Jorgensen expressed particular concern in the short term about the supply of refined petroleum products such as jet fuel and diesel.