“Achilles heel” no problem: appraisers thumbs up for excess profit tax

“Achilles heel” no problem
Experts give a thumbs up to the excess profit tax

Several European countries have already introduced a levy on companies profiting from the aftermath of war. The scientific services of the Bundestag believe that an excess profit tax is also possible in Germany – “in view of the obvious current developments”.

According to an expert report, an excess profit tax for energy companies, such as that introduced by Italy because of the Ukraine war, would also be possible in Germany. This emerges from an elaboration of the scientific services of the Bundestag, reported the “Spiegel”. The state would therefore have to demonstrate that the companies concerned have made “undeserved profits” and that they can be determined.

“In view of the obvious current developments on the energy markets, this does not seem impossible,” quoted the “Spiegel” from the paper. A restriction to traders in electricity, gas and oil, as in Italy, does not appear “at least not arbitrary in light of the current scarcity and price conditions on the energy markets”.

In addition to Italy, Great Britain, Greece, Romania and Hungary, among others, have introduced special taxes on crisis profits, and they have been announced in Belgium and Spain. Federal Finance Minister Christian Lindner, on the other hand, rejects such a tax – among other things because it would only affect some companies and excess profits are not defined in tax law.

Comparison with trade tax

“The Achilles’ heel” of the concept lies in the calculation of the excess profit, write the scientific services of the Bundestag, and an exact determination “should be almost impossible”. However, the Treasury also works in other places with simplified typifications and generalizations. The trade tax already affects only a part of the entrepreneurs, according to the report. Like the solidarity surcharge, the excess profit tax could be levied as a supplementary tax. The financial requirements can be justified with the corona pandemic and “probably also with the burdens associated with the Ukraine war and its consequences”.

Construction Secretary Cansel Kiziltepe thinks the taxation is a good idea: “The increased energy prices will hit many people hard at the beginning of the coming year,” she told the “Spiegel”. “We have to relieve households with low incomes in a targeted manner and at the same time ask those who profited from the war to pay up.”

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