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<\/p>\n
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.<\/p>\n
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.<\/p>\n
STORY CONTINUES BELOW THIS AD<\/p>\n
\u201cIt would make it possible to finance temporary relief, especially for consumers, and curb rising inflation, without placing additional burdens on public budgets,\u201d the ministers wrote.<\/p>\n
They added that such a levy would send \u201ca clear message that those who profit from the consequences of the war must do their part to ease the burden on the general public.\u201d<\/p>\n
Energy shock revives crisis playbook<\/p>\n
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\u2019s 2022 energy crisis after Russia\u2019s invasion of Ukraine.<\/p>\n
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.<\/p>\n
The ministers pointed to the EU\u2019s 2022 emergency measures \u2014 which included a windfall tax on energy firms \u2014 as a precedent. They urged the Commission to swiftly design a similar instrument \u201cgrounded on a solid legal basis\u201d in light of current \u201cmarket distortions\u201d and fiscal constraints.<\/p>\n
Brussels considers targeted measures<\/p>\n
A European Commission spokesperson confirmed receipt of the letter and said it was being assessed.
\u201cMore generally, the Commission is working closely with member states on possible targeted policy measures in response to the current energy crisis facing Europe,\u201d the spokesperson said.<\/p>\n
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\u2019 letter did not specify the proposed tax rate or which companies would be targeted.<\/p>\n
Industry pushes back<\/p>\n
The proposal has already drawn criticism from industry groups. Germany\u2019s Fuel and Energy Association rejected the notion that companies were unfairly profiting, arguing there was no justification for such a levy.<\/p>\n
\u201cOur primary goal is to maintain the supply of fuels and motor fuels in Germany under increasingly difficult conditions,\u201d the association said in a statement.<\/p>\n
STORY CONTINUES BELOW THIS ADSupply concerns linger<\/p>\n
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.<\/p>\n
The EU had rolled out a suite of emergency measures in 2022 \u2014 including a gas price cap, windfall taxes and demand reduction targets \u2014 after Russia slashed gas deliveries. Policymakers now appear increasingly willing to revisit those tools as a fresh energy crisis unfolds.<\/p>\n