Oil prices have broken 100, and the election is approaching, EU finance ministers will discuss the levy of an energy profiteering tax

The Zhitong Finance App learned that EU finance ministers will discuss on Friday whether to levy an EU-wide profiteering tax on energy companies. These companies benefited from soaring oil and gas prices after the closure of the Strait of Hormuz. Further talks are expected in October.

The debate began in late August, when the finance ministers of Germany, Spain, Portugal, Italy, Poland, and Austria warned that consumers were facing one of the worst oil supply shocks in decades, fueling voters' dissatisfaction with the rising cost of living. Next year, France, Italy, Spain, Poland, Greece, Finland, Slovakia, and Estonia will hold parliamentary elections.

As escalating attacks in the Middle East threaten more oil supply routes, crude oil futures prices have risen to more than $100 per barrel, which is about 50% higher than before the Iran war. The derivatives market shows that traders do not expect oil prices to fall in the short term.

When German Finance Minister Lars Klinbey arrived in Dublin to attend the EU finance ministers meeting, he called on the European Commission to propose a way to tax the so-called excess profits of oil companies.

Klimbey said, “The European Commission has always been cautious on this issue, even though several member states have long called for it to propose tax proposals. This must be done by the next EU finance ministers meeting in October at the latest, and today I will once again clearly express this pressure on behalf of other member states.”

“People in our country can now see how oil companies are taking advantage of this situation to demand prices from the public and greatly increase profits. This can be clearly seen from their balance sheets... If the company still dares to ask for prices under these circumstances, we must continue to pursue this matter. “My clear expectation from the European Commission is that relevant proposals be submitted immediately,” he said.

However, EU Economic Commissioner Valdis Dombrowskis said that the European Commission currently has no plans to propose a tax mechanism within the EU, and that EU countries are responsible for their own taxes and can act freely.

“We have made it clear that, in a sense, it depends on member states. Member states can decide for themselves whether to tax huge profits. The European Commission is of course willing to participate in discussions if necessary. Currently, we will not put forward proposals within the EU, but of course member states can discuss this,” Donbrovskis said.