EU to introduce windfall taxes on energy companies

European Commissioner for Economy Valdis Dombrovskis has given the green light for EU member states to introduce windfall taxes on energy companies benefiting from a sharp rise in fuel prices.

“Nothing prevents member states from applying this,” Dombrovskis told Members of the European Parliament.

He added that a coordinated approach at EU level is also being considered, CE Report quotes FENA.

His comments come after Austria, Germany, Italy, Portugal, and Spain urged the European Commission to ensure a fair distribution of unexpected profits generated by the crisis in the Middle East, Politico reports.

Energy prices in Europe have surged after Iran closed the Strait of Hormuz, through which one-fifth of the world’s oil and gas passes. The EU had already introduced a temporary windfall tax on energy companies in 2022 following Russia’s invasion of Ukraine.

The Commission is preparing a package of measures to ease the crisis, including lowering taxes on electricity compared to fossil fuels and revising the emissions trading system to prevent a rise in carbon prices.

Dombrovskis rejected proposals to suspend EU fiscal rules by activating the so-called “general escape clause,” which was used during the pandemic.

“Currently, we do not have a scenario of a serious economic downturn in the eurozone or the EU,” he said.

Italian Prime Minister Giorgia Meloni had earlier suggested that suspending fiscal rules should not be ruled out if the crisis worsens. The Commission will include the economic impact of the Middle East conflict in its next forecast in May, with Dombrovskis warning that EU growth could be reduced by up to 0.6 percent.