Federal Finance Minister Lars Klingbeil (SPD) has launched a new initiative targeting the high cost of fuel at gas stations. He has joined five other European finance ministers in sending a letter urging for a windfall tax on oil companies. This tax would be levied on those companies due to the significantly increased profits stemming from the war in Iran.
The letter, addressed to the Irish Finance Minister-who chairs the EU Council-notes that “we are experiencing one of the biggest supply shocks in decades.” The ministers point out that public dissatisfaction over the rising cost of living is growing worldwide, making a joint approach necessary to alleviate this burden on citizens.
The ministers from Portugal, Spain, Austria, Poland, and Germany specifically demand that the issue of high energy prices be addressed by discussing an EU-wide framework to tax excessive profits. They propose learning how to more effectively incorporate the profits of multinational oil conglomerates. Furthermore, they stress the critical need to receive the results of the European study on refinery profit margins as quickly as possible to ensure that refineries are not exploiting the current energy situation. According to reports from the newspaper “Spiegel”, this initiative was put forward by Klingbeil, and the windfall tax topic is scheduled to be placed on the agenda of the Ecofin conference in Ireland in mid-September.
The background to the letter is rooted in domestic politics: Klingbeil was only able to gain the support of his coalition partner, the CDU/CSU, for this measure on the condition that it is based on a comprehensive EU-wide regulation. Previously, the black-and-red governing coalition in Berlin had agreed in the spring to implement stricter monitoring of mineral oil corporations by the Federal Cartel Office. This also included the “12 o’clock rule,” which capped price increases at gas stations to once per day at noon.
However, the political consensus shifted during a government meeting in April at the Villa Borsig, where the leadership decided to implement a specific fuel discount, lowering taxes on diesel and gasoline by 17 cents. This measure, though welcomed, was only set to run until the end of July. Since then, fuel prices have sharply increased once again, escalating the public demand for government action.
