EU weighs windfall tax as war drives up fuel prices

The European Union's economic commissioner has said there are no plans "at this stage" for a bloc-wide windfall tax on energy companies, but that it is "ready to engage in discussion", and individual member states are free to impose their own taxes, amid warnings of an imminent energy shock driven by spiralling fuel prices.

Across the EU, petrol prices have risen 24 percent in the last 12 months, with diesel 38 percent higher and jet fuel having more than doubled in price, while gas trading prices have also soared. The Iran war continues to keep oil prices considerably higher than before, and market trading patterns suggest no reduction in price is expected any time soon.

"There are several member states that put forward this (windfall tax) initiative, it is part of our discussions," said Valdis Dombrovskis, European Commissioner for Economy and Productivity. "Member states can already implement windfall profit taxes at the national level if they decide to do so. From the Commission side, we are ready to support those member states by sharing best practices and finding a good way forward."

Petrol pump prices across the continent are also at record highs, and with eight EU countries, including Spain, Italy and France, having elections next year, the potential long-term political fallout of the current high prices could be enormous.

At a meeting of EU finance ministers last week, Germany's Lars Klingbeil called on the Commission to come up with ideas soon for a possible levy on what he called excessive oil company profits.

"Several member states have been calling for models for a long time," he added. "People can see how oil companies are exploiting the situation, overcharging and significantly increasing their profits."

Spanish law means the country has to have a general election by the end of August 2027, and its Finance Minister Carlos Cuerpo also backs action over fuel prices.

"We are managing to lower the bill for homes, companies, industries, transport companies, and this at the expense of the taxpayer's money," he said. "We believe there may be fairer ways to distribute this cost."

France, which will have a presidential election across April and May next year, has what its Finance Minister Roland Lescure called "a bigger electricity mix", including a large nuclear power industry, which has a close working relationship with China going back decades.

He said his government took a more cautious approach to the tax suggestion.

"This (energy) shock can have a different impact on different countries," he added. "We do feel that whatever discussion we have, whatever work has been done, needs to take into account the specificities of each country."