Poland to Introduce Windfall Tax on Oil Companies Amid Energy Price Surge
Poland's Windfall Tax Proposal and Its Implications
By Kate Abnett
Background: Surging Energy Prices and Government Response
BRUSSELS, May 20 (Reuters) - Poland will next week propose a windfall tax on oil and gas companies' profit from surging energy prices due to the Iran war, to help cover the cost of national fuel tax cuts, the country's state secretary for energy told Reuters on Wednesday.
"Next week we will be presenting some legislative initiatives," Wojciech Wrochna said in an interview, adding that the measure would target excess profits from oil and oil products, and potentially also natural gas.
Funding Tax Cuts Through Windfall Tax Revenue
Money raised by the windfall tax would be used to fund a cut in VAT and excise duties the Polish government has introduced during the Middle East crisis to try to curb consumers' energy bills.
"The cost of the tax cuts is around 1.5 billion Polish zloty (352.72 million euros)... per month," Wrochna said. "So this windfall tax we're intending to introduce should serve as a counterbalance to the decreased budget income."
Oil and Gas Companies' Profits Surge
Profits of many oil and gas firms have surged in the last few months, boosted by gains linked to the Middle East war.
Major Industry Players Report Record Profits
Shell's first-quarter profit hit its highest in two years at $6.9 billion, while Norwegian oil major Equinor posted its strongest profit in three years and France's TotalEnergies posted adjusted first-quarter net income of $5.4 billion, a 29% jump from a year ago.
European Union Perspective on Windfall Tax
Governments including Germany and Spain have urged the European Union to introduce a bloc-wide windfall profit tax. So far, the European Commission has declined, with EU officials citing concerns including that the measure would face legal challenges from companies.
Details of Poland's Windfall Tax Plan
Defining "Windfall Profits"
Poland is still finalising the design of its national windfall tax, including how it will define "windfall profits" - which could be done by comparing companies' revenue this year with that of previous years, Wrochna said.
Industry Reaction and Government Justification
He said companies were "not extremely happy" about the plans, but the Iran war had created an urgent situation.
"The situation has provoked an unjust profit in the companies that are operating on the markets we're intending to tax. So I believe that if you look at it from this perspective, it's a justified action," he said.
(1 euro = 4.2526 zlotys)
(Reporting by Kate Abnett; Editing by Kirsten Donovan )
