Six European Union countries are calling for talks in September on creating an EU-wide mechanism to tax windfall profits earned by oil companies following the surge in energy prices caused by Iran’s blockade of the Strait of Hormuz.
Finance ministers from Germany, Spain, Portugal, Italy, Poland and Austria have written to Ireland, which currently holds the EU’s rotating presidency, requesting that the proposal be placed on the agenda for the next meeting of EU finance ministers in Dublin on September 18 and 19.
Ministers Point to Major Energy Supply Shock
The six governments argue that sharply higher energy prices are intensifying cost-of-living pressures across Europe and require a coordinated response at EU level.
“We are experiencing one of the biggest supply shocks in decades, and all over the world there is growing discontent about the rise in the cost of living,” the finance ministers wrote in the letter seen by Reuters.
They argued that measures introduced by individual governments have so far failed to provide a lasting solution to higher energy costs.
“Government measures taken so far have not been sufficient to reduce or stabilise prices for businesses and citizens on a permanent basis. This is why we need a common approach, one that ensures that those who are profiting from the crisis do their part to ease the burden on the general public,” they said.
Oil and Refined Fuel Prices Surge
Oil prices have risen approximately 25% from their levels when the U.S.-Israeli war with Iran began on February 28.
The impact has been even more pronounced across some refined petroleum products. European diesel prices have climbed by more than 70% since the conflict started, while gasoline prices have increased by around 20%.
The disruption to energy supplies through the Strait of Hormuz has intensified concerns over the financial burden on households and businesses while potentially generating substantially higher profits for parts of the oil industry.
Countries Seek EU-Wide Windfall Tax Framework
The six finance ministers want the EU to examine a common framework for taxing extraordinary profits, drawing on the experience of measures introduced during the 2022 energy crisis.
“To this end, we need to address the matter of high energy prices by discussing an EU-wide framework to tax windfall profits, taking into account lessons learned in 2022, this time with a more specific analysis of how the foreign profits of multinational oil companies can be included in a more targeted way,” the letter said.
The proposal would therefore go beyond examining profits generated domestically, with ministers seeking a more targeted approach to determining how overseas earnings from multinational oil groups could be incorporated.
Refinery Margins Also Under Scrutiny
The six countries are also seeking the rapid publication of findings from a European investigation into refining margins.
The ministers want greater clarity on whether refiners have benefited disproportionately from the recent surge in energy prices and whether current margins reflect underlying market conditions.
The issue is now expected to form part of the wider European debate over how governments should respond to the economic consequences of the energy supply shock while determining how much of the burden should be carried by companies benefiting from higher prices.
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