Due to high gas prices, energy companies in the United Kingdom will have to pay an extra quarter of taxes on their profits from the next twelve months, on top of the 40 percent they already pay. The European Commission has already hinted at such a plan several times, but experts point to a number of shortcomings.
How does such a tax work?
In the UK it works like this: all energy companies operating there pay 25 percentage points more in taxes on their profits than they do today. Now 40 percent of the profits go to the British treasury.
The measure will in any case already apply for the next twelve months, after which the tax will be adjusted to the increase or decrease in energy prices at that time. The tax is lower if the profits are reinvested in the UK.
It is not clear what the European Commission’s plan will look like, but it will probably be shaped in a similar way when it comes to fruition.
Will this make energy cheaper?
If energy prices go down soon, it will certainly not be because of this tax. “In fact, costs are rising, so there is a chance that companies will simply pass this on to their customers,” says Machiel Mulder, professor of energy economics at the University of Groningen. But we should not be too afraid of that, because the energy price is currently mainly determined by geopolitical tensions.
“A problem is that as a result, companies invest less and therefore less is produced. That certainly pushes prices up,” says Mulder.
Martien Visser, energy expert at Hanze University of Applied Sciences, nuances this. “It depends on the duration of such a tax. Given that it appears to be temporary in the UK, it won’t be too much of a problem as after a year it will probably go down again and be business as usual. “
If prices don’t fall, why is the tax introduced?
The government wants to redistribute better in this way. Energy companies that become rich while their customers can no longer pay their bills are socially difficult to justify. The government is launching this plan to reduce that imbalance.
There is also an additional advantage: the government is raising more money and can therefore reduce the energy tax for households and possibly take other measures to curb high inflation.
Will Dutch companies soon have to pay such a tax?
The government is not in favor of it. Minister Rob Jetten (Climate) says he understands the rationale behind it, but sees a number of bottlenecks. His main arguments are that Dutch energy companies are currently “not making excessive profits” and that there is no measurable criterion to determine the levy.
That is a consideration that Visser also has. “There is no clear definition of excess profit. So it’s just a political decision. Energy companies need a relatively high profit to be able to reinvest it, but from when do you decide that they are making too much profit?”, he wonders.