The chief executive of Austrian multinational integrated oil, gas and petrochemical company OMV (OTCPK: OMVJF) Alfred Stern has warned that the EU's planned windfall levy could have a huge impact, and criticized basing the proposal on profits over the last three years, pointing out that they were not normal times.
"We will keep an eye on that, as it can already have a massive impact," Stern has told journalists. However, Stern says it’s difficult to assess the exact impact of the levy considering that specifics of the proposal have not yet been set out.
Brussels is hoping to skim off revenues from low-cost electricity generators and make fossil fuel firms share windfall profits in a bid to raise more than 140 billion euros ($140 billion) to shield consumers from soaring energy prices.
Governments across Europe have already plowed hundreds of billions of euros into tax cuts, handouts and subsidies to tackle a crisis that is forcing industries to shut production, driving up inflation and hiking bills ahead of winter. According to a draft proposal released on Wednesday, energy companies would pay a solidarity levy of 33% on any profits for the current year that were 20% above the average of the past three years.
Back in May, former UK Finance Minister Rishi Sunak imposed a windfall tax on oil and gas majors in a bid to alleviate the country's worsening cost-of-living crisis. Chancellor Sunak said that the levy would be taxed on energy companies that were making “extraordinary profits” due to the spike in commodity prices.
Meanwhile, Argentina’s President Alberto Fernández has vowed to pursue a special tax on company profits boosted by the war in Ukraine. The bill aims to levy an additional 15% tax on companies with profits of over 1 billion pesos (about $8.3 million) in 2022 whose profit margin is either more than 10% in real terms or is 20% higher than in 2021. The measure is seen as an attempt by Argentina’s center-left government to reduce the fiscal deficit and contain runaway inflation, which is now approaching 80%.
By Alex Kimani for Oilprice.com
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