Portugal to propose windfall tax on energy firms

Portugal will move ahead with a tax on energy companies’ windfall profits and present a proposal to parliament shortly, Finance Minister Joaquim Miranda Sarmento said in Brussels, reviving a measure used during the 2022 fuel price shock.

“We will take the measures adopted in 2022, calibrate them, improve them and shortly present a proposal to parliament”, the minister told reporters. He said the European Commission had left the decision to each member state, after Portugal, Germany, Spain, Italy and Austria asked Brussels to consider an EU-level levy on extraordinary profits in the energy sector.

Miranda Sarmento said the current situation differs from 2022 because, despite higher fuel prices linked to the conflict in the Middle East, there is no broader inflationary pressure, with core inflation at around 2.2% to 2.3%. He also said the countries that signed the letter to the Commission would try to coordinate their responses and remain open to other member states joining the effort.

The European Commission said on April 22 that member states could adopt windfall profit taxes to ensure social fairness, while keeping such decisions at national level. The IMF has argued against the idea, saying such taxes can affect investment decisions and are complex to implement, according to comments cited in the material.

Eurogroup president Kyriakos Pierrakakis also backed national, rather than EU-wide, windfall taxes on energy companies, saying supply-chain and security-of-supply concerns vary across countries. That supports Portugal’s approach of pursuing the measure domestically while seeking coordination with other governments.

Originally published at Eco.pt