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In an aggressive move even as far as windfall profit taxes go, The Czech Finance Ministry proposed on Thursday a whopping 60% tax on excess profits in its energy sector, media reported.
Finance minister Zbynek Stanjura said at a Thursday news conference that the proposed tax would be on excess profits from the energy sector starting in 2023 through 2025, bringing in $3.4 billion next year, and $6 billion across the three years. The proposal requires parliamentary approval before it can be implemented.
Affected companies would be electricity and gas producers, distributors, and traders, petrochem companies, wholesale fuel traders, and fossil fuel miners.
The point at which profits become excess profits will be determined by averaging the earnings over the previous 4 years, plus 20%. Those years notably include the pandemic years.
The windfall tax proposal is not the first to surface as countries attempt to counteract large deficits and runaway inflation, as well as to make the current energy environment more palatable for industry and citizens.
In September, the European Commission proposed an EU-wide windfall tax of 33% of profits that exceed 20% above a three-year average for all fossil fuel companies. Argentina proposed a 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 Czech government recently approved its 2023 budget draft with a deficit of about $11.5 billion thanks to—at least in part—higher planned spending thanks to Europe’s high energy prices and caps on energy prices for households and small companies.
British Prime Minister Liz Truss discussed with the Czech Prime Minister on Thursday how the two countries “could work together to secure long-term energy supplies, including cooperation on nuclear and renewables,” said a Downing Street spokesperson cited by Reuters.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.