In the dispute over a so-called excess profit tax against companies that benefit from the consequences of the Ukraine war, the political camps are rearranging themselves: in the federal government, the FDP sits at the cabinet table and strictly rejects new taxes.

However, an alliance of SPD, Greens and Left Party is now being formed in the Bundesrat, who want to implement this instrument against resistance from the FDP and Union.

The latter warn that such a tax would above all threaten further increases in the price and shortage of fuel and other energies.

Dietrich Creutzburg

Business correspondent in Berlin.

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On Friday, the Bundesrat dealt with an initiative by Bremen Mayor Andreas Bovenschulte (SPD), which is openly supported by representatives of the Greens and the Left Party: the state chamber should formally request the federal government to introduce an excess profit tax.

By then at the latest, Chancellor Olaf Scholz (SPD) would also have to commit, after SPD leader Lars Klingbeil had already campaigned for such a tax.

A spokeswoman for the Chancellor recently pointed out that the traffic light coalition agreement does not provide for any new taxes.

"Arguments and counter-arguments" would be "discussed" in the government.

“In extreme cases, the scarcity will intensify”

In the Federal Council, the finance and economic committees must first discuss the application.

It should also be a question of how such a tax should be defined.

The Bremen template does not contain any details on this.

Bovenschulte announced on Friday that he wanted to start with the new tax in the energy sector first.

Then it should be checked whether there are other sectors "where the problem is so clear".

He describes a "huge jump in profits without objective reason" as excess profit;

However, companies with special innovations or investments are exempt from the tax.

The Thuringian State Chancellery chief Benjamin-Immanuel Hoff (left) expressed clear encouragement in the Bundesrat: "It is the state's right to skim off these profits." Such a tax is the counterpart of a policy that supports companies in crises with billions in aid.

He asserted that he was not aiming for 95 percent tax rates like those that prevailed in America during World War II.

Daniel Wesener (Greens), Senator for Finance in Berlin, also expressed encouragement on Friday: "Sometimes it is pretended that we are dealing with communism here." But that is not the case.

It's just a tax on "unperforming profits".

Lower Saxony's Minister of Finance, Reinhold Hilbers (CDU) and State Secretary in the Federal Ministry of Finance, Katja Hessel (FDP), represented the opposite position to this red-green-red policy in the Bundesrat.

Additional taxes for companies that are making higher profits in the current situation would "exacerbate the problem of rising prices," Hessel warned - especially for petrol and other energy sources that consumers would hardly be able to replace with alternative products in the short term.

Companies could then pass the tax on to their customers.

And if not, it will make it more difficult for them to finance the investments they want in green electricity and hydrogen technology.

On top of that, the additional tax could make international companies prefer to sell their products elsewhere, Hessel warned.

"In extreme cases, there would be a further intensification of shortages in Germany, which would further increase prices." Instead, she took up what FDP Secretary of State for Transport Michael Theurer advises: If there is an abuse of market power in sectors, that is a case for competition law - and if necessary, this must be tightened.

"Devastating" would be the impression "that the government arbitrarily determines which profits are acceptable and which are not, based on short-term political considerations".

This could be understood as the federal government's turning away from the market economy, said Hessel;

and thus marked a red line for the FDP.

Hilbers also expressed serious constitutional doubts about the project: Does the government want to tax armaments companies higher if they benefit from the federal government's new "special fund" before procuring new equipment for the Bundeswehr?

Does she also want to tax the profits of companies that are now trying to organize replacements for failed grain deliveries from Ukraine at great risk?

Is your business then also “immoral”?

Proponents, meanwhile, point to Italy, where – at least in name – a tax on “extra profits” from energy companies has already been passed.

In fact, it doesn't look at the profit at all: You compare the sales from October 2020 to April 2021 with the same period a year later and tax the additional income.

From the company's point of view, however, this also affects gains in market share through good performance.

In addition, the comparison periods are inappropriate, since 2020 Corona depressed sales.

So far, there is all the less evidence that legislative action could follow the application from Bremen in this country.

If it does, then there will probably be politically existential consequences: either for the future of the FDP or that of the governing coalition.