Unexpected profits and anticipated decisions – Article by Vakis Charalambous, member of the C.C. of AKEL and the Economic Policy Bureau of the Party

 

 

Sunday 2 October 2022, “Haravgi: newspaper

Tax the windfall profits of fossil fuel companies, the UN Secretary General Antonio Guterres has been reiterating in a pressing manner, and invest the revenues “in sections of the population who are facing difficulties due to the increase in food and energy prices”. The President of the European Commission herself, Ursula von der Leyen, taking note of the Commission’s decisions, stresses once again the need to collect the extra profits of energy companies.

The recommendations of the UN and the EU are repeated. A number of governments have already proceeded to tax the super profits of energy companies (see Spain, Greece, Italy) and many more are planning to do so.

When the need to tax super profits is mentioned, it should be made clear that this is not a matter of taking away the profitability of these companies, but of collecting from the public purse part of the super profits they have made in the current conditions. In other words, these are not profits that have been made due to better business management, but instead profits that have been made as a result of the unprecedented increases in energy and fuel prices. In other words, a precious gift…

These super profits were ceded by consumers, who pay hefty energy and fuel bills. The result is that a very basic contradiction is being reinforced in an explosive way: households are paying bills from their savings and very limited disposable income at the same time as energy companies are amassing unprecedented profits in a crisis situation.

Under these circumstances, taxing the windfall profits of energy companies is politically compatible, economically imperative and socially necessary.

In the face of windfall profits, the government must also take the expected decisions. Instead, the government ruling forces are keeping their mouths shut. They aren’t saying a single word about AKEL’s proposal for the taxation of super profits. The Finance Minister has responded with mockery and irony in relation to AKEL’s constant pleas for a debate on this crucial issue. In fact, in the eyes of the public, he is engaging in petty politics via Twitter and, while stating that he will invite AKEL for a dialogue, he is still looking for a way to arrange the meeting!

The taxation of super profits is urgent and this issue cannot also be referred to sometime in the future either, as the government is planning to do, as it says it will open the debate at the beginning of 2023.

AKEL is fully consistent in its stand towards society and the need for immediate measures to be taken so as to provide effective relief to households from the unprecedented price hikes, has tabled draft bills which represent a continuation of the proposals tabled for reductions in electricity taxes and the abolition of the double taxation on fuel.

The state can raise money in a financially sustainable way and use it to combat energy poverty and help people in need today. The government is already in a position to do so, since the State itself has collected additional revenues from taxes due to the tax burden of the price of fuel, which will reach EUR 1 billion by the end of the year.

The tools are there. Is the political will there though?