The Left group in the European Parliament has set out why the EU needs an “excess profits” tax, in an explorative analysis of the largest and most profitable companies published on Thursday 16 May.
“Excess profits” are defined as a ratio of profits over assets. Rates of return are considered ‘normal’ when this ratio reaches a limit of 10% and ‘excess’ when this ratio reaches a limit of 15%.
The analysis is based on four arguments in favour of this measure: Taxing “excess profits” once is not enough to finance the transition; the most profitable companies often avoid tax the most; regulation and antitrust measures are not enough to control corporate power; the largest companies are too big for functioning markets and democracy.
The study identified 209 companies with turnover in excess of €20 billion and profit margins in excess of 10% for at least 3 years. Together, they are recording profits in excess of this margin that total almost €2 trillion, i.e. around €300 billion more than before the Covid-19 and energy crises.
This tax could bring in around €100 billion a year for the EU.
Read the study: https://aeur.eu/f/c8f (Original version in French by Anne Damiani)