Should oil companies pay an extra tax for additional profits from higher energy prices? CDU politician Klöckner explains why she doesn’t think it makes sense.

The economic policy spokeswoman for the Union parliamentary group in the Bundestag, Julia Klöckner, spoke out against an excess profit tax on additional profits made by the oil companies as a result of increased energy prices as a result of the Ukraine crisis.

“High prices and profits are usually an expression of scarcity, including in energy markets. Defining and taxing their “excess profit” is an obstacle to innovation and research,” said the CDU politician to the German Press Agency. The distinction between good and bad profits is “questionable and problematic”.

A push by Bremen, Berlin and Thuringia for a special tax on high additional profits made by companies as a result of the Ukraine war met with resistance in the Federal Council and the Ministry of Finance. The three countries want the Bundesrat to ask the federal government to submit a proposal for the temporary levying of such a tax for 2022. State relief measures are to be financed from the revenue.

Klöckner warns of disputes and migration

Klöckner warned that an “excess profit” was difficult to define, constitutionally difficult, bureaucratic, foreign to German tax law and therefore “very prone to dispute”. Such a special tax or a higher tax on profits will prompt international mineral oil companies to switch to more attractive sales markets. “The result would be further shortages and higher prices.”

Only very few oil companies are taxable in Germany, “so that taxing excess profits would be symbolic politics,” said Klöckner. Companies would pass such a tax on to customers. The profits would already be recorded and charged for income tax. The higher the profits, the higher the taxes to be paid. “Introducing special taxes for individual sectors depending on the economic situation would encourage arbitrariness and populism.”