The German Finance Minister, Lars Klingbeil, said that he was “firmly convinced” of the need, in the interests of “fairness”, for “groups making profits from the crisis to also share in its costs”, on Monday 4 May on his arrival at the Eurogroup, during which the Ministers discussed the macroeconomic impact of the war in the Middle East.
Aware that there is currently “no majority” at European level in favour of “a windfall tax” on energy groups, Mr Klingbeil nevertheless hoped to find a majority in the Council of the EU, and was pleased to have “countries like Spain and Italy” on his side.
This is not the time to repeat the precedent of September 2022, when Russia’s military aggression against Ukraine triggered a shock in energy prices, to which the EU responded by introducing a temporary compulsory solidarity contribution targeting the excess profits of energy companies (see EUROPE 13033/1).
Despite a request from five EU countries (Austria, Germany, Portugal, Spain, and Italy) (see EUROPE 13843/5), the Commission has not recommended such an initiative in its ‘toolbox’ of emergency energy and budgetary measures to deal with the current inflationary shock.
“Member States can use it. We are currently not foreseeing recommending any European initiative”, European Commissioner for Economy, Valdis Dombrovskis, said. According to the Commission assessment, the previous windfall profits tax during the previous energy crisis produced “mixed results”.
Confirming that taxing windfall profits is a “national process”, the President of the Eurogroup, Kyriákos Pierrakákis, reiterated the current watchword: the emergency budgetary measures taken by the Member States to support the households and businesses most affected must be “targeted, temporary, in line with the fiscal rules we have agreed upon, and also consistent with the objectives of the green transition”. “This balance is not easy, but it is absolutely necessary”, he noticed, as many countries do not have the same budgetary resources as during the Covid-19 pandemic.
However, according to a source in the French Finance Ministry, “around 20 EU countries have taken non-targeted measures”, such as cutting VAT on energy products. This source also criticised the possibility granted by the Commission of temporarily cumulating support adopted under the ‘CISAF’ and ‘METSAF’ frameworks on State aid, a measure which - in their view - is “not consistent” with the objectives of decarbonising the European economy and ensuring fair competition between EU countries (see EUROPE 13859/1).
Contrary to the Spanish and Italian requests (see EUROPE 13856/3), the Belgian Minister, Vincent Van Peteghem, has recommended measures that are “consistent” with the Stability and Growth Pact. “I do not see a case where we open or activate the general escape clause [of the Pact] for a temporary price shock”, he said. In his view, since this is a crisis in the supply of energy products, supporting demand would push prices even higher.
Many Ministers - including France’s Roland Lescure and Poland’s Andrzej Dománski - have called for faster investment in decarbonisation. “Poland is now the largest field of clean energy transformation in Europe”, emphasised Mr Dománski, citing wind and nuclear power.
Spain’s Carlos Cuerpo, meanwhile, voiced his country’s concern about possible shortages of “kerosene” in tourist source countries in the run-up to the tourist season. (Original version in French by Mathieu Bion)