Five EU nations have proposed a windfall tax on energy firms to fund consumer relief as fuel prices surge amid the Iran war, with Brussels assessing fresh crisis measures
Five European Union nations have called for a bloc-wide windfall tax on energy companies, arguing that surging profits driven by the Iran war should be used to shield consumers from spiralling fuel costs.
In a joint letter dated Friday and seen by Reuters, finance ministers from Germany, Italy, Spain, Portugal and Austria urged the European Commission to introduce a temporary tax on excess profits, saying it could help fund relief measures without straining public finances.
STORY CONTINUES BELOW THIS AD
“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.
They added that such a levy would 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.”
Energy shock revives crisis playbook
The proposal comes as oil and gas prices surge following US-Israeli strikes on Iran that began on February 28, triggering a supply shock reminiscent of Europe’s 2022 energy crisis after Russia’s invasion of Ukraine.
Despite progress in diversifying energy sources and expanding renewables, Europe remains heavily dependent on imported fuel, leaving it vulnerable to geopolitical disruptions. European gas prices have jumped more than 70 per cent since the latest conflict erupted, according to industry data cited by Reuters.
The ministers pointed to the EU’s 2022 emergency measures — which included a windfall tax on energy firms — as a precedent. They urged the Commission to swiftly design a similar instrument “grounded on a solid legal basis” in light of current “market distortions” and fiscal constraints.
Brussels considers targeted measures
A European Commission spokesperson confirmed receipt of the letter and said it was being assessed.
“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.
EU Energy Commissioner Dan Jorgensen has also indicated Brussels is considering reviving crisis-era tools, including curbs on grid tariffs and electricity taxes, to cushion households and businesses.
However, the ministers’ letter did not specify the proposed tax rate or which companies would be targeted.
Industry pushes back
The proposal has already drawn criticism from industry groups. Germany’s Fuel and Energy Association rejected the notion that companies were unfairly profiting, arguing there was no justification for such a levy.
“Our primary goal is to maintain the supply of fuels and motor fuels in Germany under increasingly difficult conditions,” the association said in a statement.
STORY CONTINUES BELOW THIS ADSupply concerns linger
Brussels remains particularly concerned about near-term supplies of refined petroleum products such as diesel and jet fuel, as the conflict continues to disrupt global markets.
The EU had rolled out a suite of emergency measures in 2022 — including a gas price cap, windfall taxes and demand reduction targets — after Russia slashed gas deliveries. Policymakers now appear increasingly willing to revisit those tools as a fresh energy crisis unfolds.
End of Article