Are oil giants taking advantage of chaos to profit? Germany and six other countries sent a letter to the European Union requesting the introduction of a profiteering tax

The Zhitong Finance App learned that on Monday, the finance ministers of six EU member states sent a joint letter showing that Germany, Spain, Portugal, Italy, Poland, Austria and other countries hope that the EU will hold a meeting in September to discuss the establishment of a mechanism to levy a special tax on oil companies that have profiteed huge profits due to Iran's blockade of the Strait of Hormuz.

This letter is addressed to Ireland, which currently holds the rotating presidency of the European Union. In a letter, the finance ministers of the six countries requested that the rotating presidency include this topic on the agenda of the next round of EU finance ministers meeting. The conference is scheduled to take place in Dublin from September 18th to 19th.

According to the letter received, the finance ministers of the six countries wrote, “We are facing one of the worst supply shocks in decades. Globally, people are increasingly dissatisfied with the rising cost of living.”

They further stated, “The measures taken by countries so far have not been able to reduce or stabilize the price levels faced by businesses and citizens in a sustainable manner. Therefore, we need to act together to ensure that those benefiting from the crisis can do their part to reduce the burden on the public.”

Since the US and Israel went to war against Iran on February 28, international oil prices have risen by about 25%, while the price of refined oil products has risen even more sharply — European diesel prices have soared by more than 70% since the war began, and gasoline prices have also risen by about 20%.

The letter stated, “To this end, we must begin to deal with the problem of high energy prices and establish a profiteering tax framework covering the European Union through discussions. In this process, lessons learned from 2022 should be learned and more specifically analyzed how overseas profits of multinational oil companies can be included in the scope of taxation in a more targeted manner.”

Furthermore, the finance ministers of the six countries also stated that they hope to see the results of the EU investigation on refinery profit margins as soon as possible to ensure that refiners are not taking advantage of the current sharp rise in energy prices to obtain improper benefits.

“Energy companies should not take advantage of chaos to profit”

According to information, German Finance Minister Lars Klingbeil (Lars Klingbeil) has emphasized many times that in the current turbulent period, energy companies must never take advantage of the fire to rob and harm consumers' interests. A source from its department also pointed out that “excess profits during the crisis must be returned to consumers.”

In fact, as early as the beginning of this year, some co-signatory countries proposed taxing the profits of oil companies. Since the US and Israel launched military action against Iran in February of this year, the Strait of Hormuz, a key shipping channel, has been severely disrupted, and energy giants have recorded huge profits as a result.

However, despite pressure from many countries, the EU has so far not sent a clear signal on whether to introduce a new round of oil profiteering taxes.

At the same time, there are also policy differences within member countries. Take Germany as an example. Although Krimbel's center-left Social Democratic Party (SPD) supports the levy of profiteering taxes, the center-right CDU (CDU) to which Prime Minister Friedrich Mertz belongs clearly expressed opposition.