Oil? Portugal (and more) asks for extraordinary profit tax

«The ongoing conflict in the Middle East remains the main factor responsible for increasing energy prices. Oil companies are benefiting from overall profitability and margins in refined products which, although they may be influenced by specific shortages of certain products, exceed the increase in crude oil prices", says Finance Minister Joaquim Miranda Sarmento and his counterparts from Austria, Germany, Italy, Poland and Spain.

In a letter sent to the Irish Presidency of the Council of this six months and to which the Lusa agency had access today, the six governments argue that it is necessary to "approach the issue of high energy prices by discussing a European Union-wide framework for the taxation of extraordinary profits, taking into account the lessons learned in 2022 and this time with a more specific analysis of how profits made abroad by multinational oil companies can be included in a more targeted way".

They therefore want ‘a common European mechanism capable of protecting the single market while ensuring that the diversity of national situations and their stakeholders are taken into account, as well as compliance with the principle of subsidiarity’, according to Lusa’s missive.

Portugal and these five countries call for the matter to appear at a forthcoming meeting of EU finance ministers, such as the informal meeting held on 18 and 19 September in Dublin, under the Irish presidency of the Council.

The six ministers warn that “if the conflict continues, the high energy costs will also continue to affect the prices of other products and services”, affecting areas other than fuels.

"We are facing one of the biggest supply shocks of the last decades and, worldwide, the discontent about the increase in the cost of living grows", they say.

The letter takes up a question that Portugal, together with other countries, had already asked the European Commission last April, advocating a common response to tax extraordinary profits in the energy sector, as well as the solidarity contribution created in 2022.

However, Brussels considered in May that the adoption of a tax on these profits was a decision of each Member State.

In view of the lack of conditions for moving forward with a harmonised solution at EU level, the Portuguese Government decided to move forward with a national measure and approved in July a temporary contribution of 33% on the extraordinary profits of crude oil and refining companies.

Portugal maintains, however, the defence of a European response, considering that a common solution would allow for more coordinated action between Member States and avoid distortions in the single market.

The initiative comes at a time of pressure on European governments to respond to the impact of rising energy costs on the purchasing power of households and on the costs of businesses.