Market Update: Five EU nations urge tax on energy firms’ windfall profits – Full Analysis

Queues at the Mousquetaires gas station in Peage de Roussillon, France, on 3 March. Motorists globally have been affected by fuel price increases because of the Middle East conflict.

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Spain and four other European Union nations have called for a tax on windfall profits of energy companies in response to rising fuel prices due to the Middle East war, Spanish Economy Minister Carlos Cuerpo said Saturday.

The request was made in a letter addressed to EU Climate Commissioner Wopke Hoekstra and signed by Cuerpo along with the finance ministers of Austria, Germany, Italy and Portugal, he said in a post on X.

Cuerpo said such a measure would “ease the burden on consumers and taxpayers”.

In their letter, dated Friday, the ministers added that the tax “would also send a clear message that those who profit from the consequences of the war must do their part to ease the burden on the general public”, according to a copy posted by Cuerpo.

Oil and gas prices have surged since US-Israeli strikes on Iran began on February 28, resulting in Iran effectively blocking the strategically vital Strait of Hormuz and damage being done to Gulf energy infrastructure.

Although the EU sources most of its oil and gas from regions other than the Gulf, high global prices are still affecting businesses and households.

The ministers noted that a similar emergency tax was implemented in 2022 to address soaring energy prices following Russia’s invasion of Ukraine.

“Given the current market distortions and fiscal constraints, the European Commission should swiftly develop a similar EU-wide contribution instrument grounded on a solid legal basis,” they wrote.

The letter did not specify the proposed level of the windfall tax or which companies would be affected.