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Italy is raising the windfall tax on energy companies in its 2023 budget bill to fund additional help to consumers amid high energy prices and inflation.
In the $36-billion (35 billion euros) budget law the government approved early on Tuesday, Italy plans to raise the tax on the extra profits of the firms selling energy to 35% from 25% through the middle of 2023. Next year, the tax rate on energy firms will be calculated differently and will be based on the additional net profits the companies declare, not on sales.
The budget, the first for Italy’s new government led by Giorgia Meloni, imposes higher windfall taxes on energy days after the UK also raised its taxes on oil and gas producers operating in the North Sea and expanded the windfall tax to include low-cost electricity generators.
Last week, UK Chancellor of the Exchequer, Jeremy Hunt, said in the Autumn Statement that the UK is raising the Energy Profits Levy by 10 percentage points to 35% from January 1, 2023, and is extending it to the end of March 2028, from December 31, 2025, as originally planned when the levy was 25%. The government expects the Energy Profits Levy to raise over £40 billion by 2027-28.
The government is also introducing a new temporary 45% Electricity Generator Levy that will be applied to the extraordinary returns being made by electricity generators. The levy will be introduced from January 1, 2023, and is then forecast to raise around £14.2 billion over the forecast period (2022- 2028). The levy will be applied to groups generating electricity from nuclear, renewable, and biomass sources “who are benefitting from a significant increase in the price received for their output without a corresponding increase in the costs of generation.”
Also last week, Austria unveiled plans to impose a windfall tax on energy firms, including a tax of up to 40% for oil and gas companies.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.