Should there be a windfall tax on energy companies? - Today with Claire Byrne
As gas and electricity prices continue to rise, energy companies can expect to make massive profits this coming winter.
This revelation has prompted Eamon Ryan, the Energy Minister and the Government to toy with the idea of implementing a windfall tax on these companies. A decision, energy companies say they will rebuke and would discourage energy companies from further investing in Ireland.
In light of this news, our Head of Communications, Daragh Cassidy discussed whether implementing a windfall tax is feasible for Ireland on Today with Claire Byrne on RTÉ Radio 1.
You can listen to the interview in full by simply clicking the play button above. You can also find a summary of the key takeaways from the interview outlined below.
Key takeaways from this interview
- A windfall tax on energy generating companies would see the Government subject a tax levy on companies who make above-average profits, even though the Government had nothing to do with the process of extracting the oil, coal or fuel needed for energy production that the companies sell.
- In Ireland, we do not produce a lot of the energy we use, Irish companies are mainly energy suppliers rather than energy generators. It is the companies that generate energy that are making the majority of the record-breaking profits.
- Most of the astronomical profits being made from the energy price crisis are being made from foreign companies who aren’t located within Irish territory or the EU such as Shell, BP, and Aramco.
- As a result, it would be difficult to impose a windfall tax. It would need to be done at an EU level, as Ireland could not enforce it by itself.
- Although Ireland has the Corrib gas field that could be subjected to the windfall tax, its resources are quickly depleting anyway.
- Bord Gáis Energy made €23 million in profits in 2021. In the first half of 2022, it made €40 million in profits, a 72% increase.
- In 2021 ESB made a record-breaking profit of €679 million. It is an Irish-owned company so its profits go back to the Irish consumer anyway. The Government took a dividend of €126 million from ESB’s profits, which went back to consumers in the form of the €200 energy credit.
- The remaining money was invested into the energy grid and renewable energy, if we took a bigger chunk of ESB’s profit, then it would eventually come back to bite consumers, as they would be taxed larger sums in the future to pay for the upkeep of the grid and to support the investment in renewable energy.
- The Irish Government has been making money off the energy price crisis, Daragh believes the Government needs to reduce the VAT on energy to 5%.
- There is currently a 9% VAT on energy, this is due to return to 13%, however, Daragh states this should be lowered to 5%.
If you want to learn more about the potential implementation of a windfall tax in Ireland, check out Daragh's article on the topic here.
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