Six EU states push for excess profit tax on oil majors

Push for EU-wide levy

Finance ministers from Germany, Portugal, Spain, Austria, Italy and Poland have renewed calls for a European Union-wide excess profit tax on oil companies amid persistently high fuel prices, outlining their position in a joint letter to Ireland's finance minister, who currently holds the rotating EU Council presidency. "We are experiencing one of the biggest supply shocks in decades, and around the world, discontent is growing over the rising cost of living," the ministers said in the letter, according to German broadcaster NTV. The six finance ministers emphasized that government measures taken so far had not been sufficient to permanently lower or stabilize energy prices for households and businesses across the bloc facing the sharp rise in energy costs.

'Those who profit from the crisis'

The letter stated that the sharp rise in energy prices requires coordinated action to ensure that those benefiting from the crisis contribute to easing the burden on the general population. "Therefore, we need a common approach that ensures those who profit from the crisis contribute their share to reducing the burden on the general population," they said. The ministers called for "an EU-wide framework to tax excess profits," drawing on the experience of a similar emergency measure temporarily introduced in 2022 as governments sought to respond to soaring energy prices following Russia's war in Ukraine, when energy companies were taxed on exceptional profits deemed to result from external market shocks rather than genuine increased efficiency or investment.

Multinational profits and refinery margins

The ministers said lessons from the 2022 measure could help determine how profits earned abroad by multinational oil companies can be more effectively included in an excess profit tax, addressing concerns about firms shifting earnings across borders to avoid national levies. They also called for the results of a European study into refinery margins to be released as soon as possible, saying they could provide a basis for measures to ensure refineries do not exploit the current energy situation to the detriment of ordinary consumers and businesses. The renewed push comes as high fuel prices have increased pressure on European governments to intervene and ease the impact on households and businesses, with major oil companies reporting substantial earnings in July.

According to Oxfam, the combined profits of BP, Chevron, Eni, ExxonMobil, Shell and TotalEnergies reached nearly €40 billion ($46.6 billion) between April and June, with full-year projections of €147 billion ($171.2 billion). The anti-poverty organization has called for a permanent excess profit tax of at least 50 percent on profits exceeding a 10 percent return on investment, arguing that such windfalls are excessive during a cost-of-living crisis. The initiative was reportedly launched by German Finance Minister Lars Klingbeil, who aims to place the issue on the agenda of an EU economic and finance ministers meeting scheduled for September 18-19 in Dublin, while Portugal presented a draft excess profit tax at the end of July with revenues earmarked to support families and economic sectors affected by rising fuel prices.