Proposed tax on energy companies’ excess profits sparks debate within federal coalition

Belgium’s Energy minister Tinne Van der Straeten (Flemish greens) has proposed a one-off 25 percent windfall tax on surplus profits made by gas, electricity and petroleum companies. The proposal caused division within the federal government, however, with Finance minister Vincent Van Peteghem (CD&V, christian democrats) suggesting the tax would be “legally unfeasible” and CD&V chairman Sammy Mahdi accusing the Energy minister of “announcement politics”.

Van der Straeten's proposal is based on the Italian model, which levies a 25 percent tax on the excess profits made from high energy prices. Specifically, Van der Straeten would determine these excess profits by comparing the gross profit margin in the period from 1 January to 31 December this year versus the same period last year.

The tax would be calculated per quarter, and would only be levied if the increase in a quarter was at least 100.000 euros in nominal terms and more than 10 percent in terms of percentage. Moreover, the tax would be "technology-neutral": both electricity and natural gas companies or petroleum traders fall within the scope of Van der Straeten’s proposal. The minister is working out the details with Finance minister Vincent Van Peteghem, she said in the federal parliament’s Chamber of Representatives on Tuesday.

“All experts agree that it is unrealistic to impose an additional charge on Engie with a simple tax”, CD&V chairman Sammy Mahdi said.

However, Finance minister Van Peteghem (CD&V) has already made clear that he is not convinced by the proposal. According to him, almost all experts say that the tax is legally and technically unfeasible. Earlier on Tuesday evening, CD&V’s recently elected chairman Sammy Mahdi had already spoken out against the idea and accused the Energy minister of “announcement politics”. “All experts agree that it is unrealistic to impose an additional charge on Engie with a simple tax”, he said.

Furthermore, Finance minister Van Peteghem suggested the Energy minister would be better off working through an extension of existing contributions, such as the so-called ‘nuclear tax’. This was also communicated during consultations with Van der Straeten's services, he said.

According to Van der Straeten, this is impossible because the government is “bound hand and foot” to contractual provisions which the previous government reached with Engie/Electrabel, the operator of Belgium’s nuclear power plants. “Otherwise we will expose ourselves to damage claims.” Working through excess profits is legally feasible, Van der Straeten insists. “Other countries show that it is possible”, she says.

(BRV)

Energy minister Tinne Van der Straeten announced her proposal during a plenary session of the Chamber at the federal parliament in Brussels © BELGA PHOTO JAMES ARTHUR GEKIERE