Listen: Fuel price spike reignites push for EU windfall tax on oil and gas profits

Production: By Europod, in co-production with Sphera Network. EUobserver is proud to have an editorial partnership with Europod to co-publish the podcast series “Briefed” hosted by Léa Marchal. The podcast is available on all major platforms. Find the full transcript below: Oil prices are back above 100 dollars a barrel, pushing up fuel prices as fighting intensifies around the Strait of Hormuz. Could taxing the windfall profits of oil and gas companies help governments support consumers? And what is the EU doing about it? With fuel prices rising again, the idea of taxing windfall profits is back in the political debate. Finance ministers from the 27 EU member states met in Dublin on Friday and Saturday to discuss a range of issues. And several countries wanted to put windfall taxes on the agenda. This was the case for Spain and Germany, for example, with German minister Lars Klingbeil and his Spanish Carlos Cuerpo making a strong case for such a tax before and during the meeting. Maybe a quick recap here of what exactly a windfall tax means: The idea is to impose an additional tax on companies that make exceptionally high profits during a crisis. Take oil. Its price is set on international markets. So when prices rise sharply, the multinational companies producing and selling oil can make much higher profits, even though their costs may not have increased by the same amount. At the end of August, Spain, Germany, Portugal, Austria and Italy sent a letter to the European Commission calling for a windfall tax. They are arguing for such a tax in the longer term to help finance the energy transition. But right now, they also want it as a way of responding to the current energy crisis. So how has this proposal been received by the other EU countries? Well, it doesn't have much support so far. In fact, the five countries weren't even able to get the issue officially onto the agenda of the EU's informal finance ministers' meeting in Dublin. And there is another important point here: the EU has already opened the door to windfall taxes. Back in 2022, after Russia's full-scale invasion of Ukraine, the EU adopted measures allowing member states to impose temporary taxes on exceptional profits in the energy sector. According to the European Commission, the windfall profit taxes introduced by a majority of EU countries generated around €26bn in 2022 and 2023. That's significant. But to put it into perspective, EU governments spent an estimated almost €200bn on energy-crisis measures in 2022 alone. So what's different this time? The difference is that these five countries are now calling for an EU-wide tax: one common model that would be mandatory across all member states. The system introduced in 2022 was different. It allowed each member state to impose its own tax at national level. And this is where things get complicated. A significant number of EU countries oppose introducing another tax at European level. And because decisions on EU taxation require unanimity among the 27 member states, any new EU-wide windfall tax would need the agreement of every single country. The European Commission's position is essentially that member states are free to tax windfall profits if they want to, and that the debate is not mature enough to propose a new measure at EU level. And indeed, even if the Commission were to put such a proposal on the table, it would need the backing of all 27 member states.