EU considers bloc-wide tax on energy prices as winter crisis deepens
The EU could bring in a bloc-wide tax on energy profits and cap prices as it ramps up its response to an escalating winter crisis that threatens to starve the bloc of supplies this winter.
The executive arm of the European Union (EU) is looking to potential methods to limit energy prices and cut electricity demand.
This comes amid soaring energy costs across the continent putting pressure on households, businesses and industry.
European Commission chief Ursula von der Leyen is expected to outline the Commission’s ideas on capping energy prices in a speech on 14 September.
Russia has slashed gas deliveries to Europe, in retaliation to Western sanctions following the country’s invasion of Ukraine.
This has has sent gas prices rocketing to record-high levels and left countries scrambling to buy non-Russian gas and shield consumers from soaring bills.
Mechthild Woersdoerfer, Deputy Director General of the European Commission’s energy department, said: “There is work on emergency measures on electricity prices. There might be also something on demand reduction for electricity,”
Brussels is also weighing up taxing windfall profits that companies make from soaring energy prices, Woersdoerfer revealed to a parliamentary committee.
The meeting will come a few days after EU countries’ energy ministers hold an emergency gathering on 9 September to discuss their response to a surge in energy prices, which are hammering Europe’s industry and hiking household bills for the coming winter.
EU countries are responsible for their national tax rates, and the Commission confirmed in May that Governments impose levies on company profits from high gas prices and use the proceeds to offset higher electricity bills.
For instance, Italy has already rolled out an energy windfall levy.
Any EU-wide tax would need approval from all 27 member countries, while some country leaders are demanding more action to rein in costs.
Italy, Belgium and the Czech Republic are among those seeking a bloc-wide gas price cap, while France and Greece want Europe to decouple the price of electricity from the surging price of gas.
The Commission is also looking into an overhaul of the EU electricity market design.
Woersdoerfer argued those reforms would be a longer-term measure, and that the EU would assess “concrete options” for the changes after von der Leyen’s speech.