03:30 Taxing the high profits of energy companies will not save us from the crisis

Due to high gas prices, British energy companies will have to pay an additional quarterly tax on their profits over the next 12 months, in addition to the 40% they already pay. The European Commission has hinted at such a plan on several occasions, but experts point to a number of shortcomings.

How does such a tax work?

This is how it works in the UK: all energy companies operating there pay 25 percent more tax on their profits than they do now. Today 40% 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 on that date. The tax is lower if the profits are reinvested in the UK.

It’s unclear what the European Commission’s plan will look like, but when it comes down to it, it will likely take shape.

Will it make energy cheaper?

If energy prices fall soon, it is certainly not because of this tax. “In fact, the costs are rising, so companies have the opportunity to 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 price of energy is now mainly determined by geopolitical tensions.

“One problem is that companies invest less and therefore produce less,” says Mulder. That definitely drives prices up,” he says.

Martien Visser, energy expert at Hanze University of Applied Sciences, deserves it. “It depends on how long such a tax lasts. Considering it’s temporary in the UK, that won’t be too much of a problem as after a year it will probably go away and work normally. †

Why tax if prices don’t fall?

The government wants to redistribute better in this way. It is socially difficult to justify public services that enrich them when their customers can no longer pay their bills. The government is launching this plan to reduce this imbalance.

There is an added benefit: the government brings in more money and could therefore lower energy taxes for households and possibly take other measures to curb high inflation.

Will Dutch companies soon have to pay such a tax?

The government disagrees. Minister Rob Jetten (Climate) says he understands the logic behind this, but sees some bottlenecks. Their main argument is that Dutch energy companies are “not currently making excessive profits” and that there are no measurable criteria for setting the tax.

This is an idea that Visser also has. “There is no clear definition of excess profit. So it’s just a political decision. Utilities need a relatively high profit to reinvest, but when is it ‘are they making too much profit?’ he asks.