Germany’s finance minister, Lars Klingbeil, joined several of his European Union counterparts in calling for a tax on the windfall profits being made my energy companies amid the war in Iran.
News agencies on Saturday reported that the finance ministers of Germany, Austria, Italy, Portugal and Spain had written a letter to EU Climate Commissioner Wopke Hoekstra.
The call comes amid soaring fuel prices sparked by Iran’s closing of the Strait of Hormuz, itself an act of retaliation against US and Israeli strikes.
Diesel prices in Germany have spiked to another record high as the Easter weekend began.
The daily average price for a liter of diesel reached €2.391 ($2.75 per liter — $10.45 per gallon) on Friday, a new all-time high, according to ADAC, an automobile association.
On Thursday, diesel prices had already surpassed Wednesday’s previous record, at €2.346.
What did the EU finance ministers say in their letter?
The ministers said a windfall tax would “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.”
It would also send a signal that “we stand united and are able to take action,” they added. “It would make it possible to finance temporary relief, especially for consumers, and curb rising inflation, without placing additional burdens on public budgets.”
The ministers pointed to an emergency tax brought in amid the energy crisis in 2022, triggered by 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.
What might EU measures against the fuel crisis look like?
The 2022 measures included a tax on the windfall profits being made by energy companies, a cap on gas prices, and targets to curb the demand for gas.
EU Energy Commissioner Dan Jorgensen has already said the bloc is considering similar measures again.
Despite massively expanding its renewable energy capacity, the EU remains heavily reliant on imported fossil fuels.
Imports of Russian fuel into European countries, Germany in particular, were somewhat offset by increased imports from the Gulf. But prices are rising even in countries that are not dependent on oil and gas that would have to pass through the Strait of Hormuz.
The surging oil and gas prices since the outbreak of the Iran — European gas prices, for instance, have risen over 70% since February 28 — have made affordable energy a top priority for European policymakers.
Edited by: Sean Sinico