Energy prices have soared in the aftermath of the war in Ukraine, and energy-related corporate profits have soared worldwide this year.
As of the last two quarters, Exxon Mobil, Chevron, Shell, BP, and Total Energy, the world's 1st to 5th largest oil companies, were found to have earned about $60 billion in profits, or nearly 80 trillion won in our money. is at an all-time high.
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As common households in each country suffered from the 'war', it became known that giant energy companies were sitting on a cushion of money, and discussions on 'windfall tax' began in earnest in each country.
If you interpret the meaning of the word 'windfall tax' called 'windfall tax' in English, you will be able to see it as a tax imposed on 'fruits that have fallen from the wind', that is, 'income that has luckily fallen from the sky'.
In Europe, the UK, Italy, Spain, and Hungary took the lead in introducing windfall taxes.
The UK imposed a 25% windfall tax on electricity and gas companies this year, and the Sunnack Cabinet decided to further expand the target and rate of the windfall tax.
British Treasury Secretary Jeremy Hunt recently announced the budget and mid-term fiscal outlook, raising the tax rate for electricity and gas companies from the current 25% to 35%, and levying a new tax of 45% of profits on power generation companies.
The windfall tax levy period has also been extended to 2028.
Italy decided to impose an additional windfall tax of 25% on energy companies that made a profit of more than 5 million euros from October last year to March this year, and Hungary also decided to pay a windfall tax to insurance companies and airlines as well as energy companies this year and next. We decided to walk a total of 800 billion forints.
Spain has announced that it will temporarily impose a windfall tax on banks and energy companies for two years from 2023 to collect 7 billion euros, and then use it to build public housing, issue free tickets for state railways, and pay scholarships.
In the midst of this trend, at the end of September, the European Union (EU) also formulated a windfall tax on fossil fuel companies that made huge profits from soaring energy prices.
EU Commission President Ursula von der Leyen said, "It is wrong to profit from war," and emphasized that the so-called 'excess profits' of these companies should be distributed and delivered to those who need assistance most.
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After the EU's announcement, Germany also recently detailed plans to impose a windfall tax.
According to local media, the German government plans to introduce a system by the end of this year to impose a 33% tax on oil, gas and refinery companies whose profits this year or next year exceed the 2018-2021 average by 20% or more. .
About 10 companies in Germany are known to be subject to the windfall tax, which is estimated to generate between 1 billion and 3 billion euros in additional tax revenue.
The Finnish government has also said it is considering introducing a temporary tax that would impose a one-year windfall tax on the excess profits of energy companies.
The specific method of charging has not been announced yet, but it is known that the introduction will be early next year.
Austria has also said it plans to impose a windfall tax of up to 40% on energy companies.
As people's livelihood has become difficult amid steep inflation, government-level support for energy costs has become a trend in European countries, and windfall taxation on energy companies using fossil fuels is becoming a new normal as a way to secure financial resources for this.
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Of course, it is not without controversy.
The argument is that as government tax revenue increases, energy companies will suffer a blow to their competitiveness.
Especially these days, when the transition to low-carbon electricity production is urgently needed, if the government collects a certain amount or more than a certain percentage of profits as taxes, there are many concerns that companies will have no choice but to postpone important investments.
In the end, it is argued that the problem of switching to eco-friendly energy and reducing energy dependence on other countries will be postponed.
There are also problems in terms of equity, and there is still opposition from the industry that it will reduce jobs in related industries and give a disastrous blow to small businesses with relatively weak competitiveness.
Despite these controversies, it seems unlikely that European countries will be in any hurry to stop or reduce windfall taxes.
In the case of Britain, which took the lead this year in imposing a windfall tax on energy companies, and social controversy was hot, BP announced that it made a profit of 7.1 billion pounds in the three months of the third quarter, which was more than double the profit for the same period last year.
Shell has announced that it has received a tax rebate despite making a £25bn profit so far this year.
This is why the imposition of a windfall tax, which has been criticized as foolish like cutting open the belly of the goose that lays golden eggs, is becoming a new normal in 2022 in Europe, albeit for a limited time.