Sherlock seeks action on energy profits

Cost of living continues to soar with windfall tax needed on energy profits

As the cost of living continue to soar, Cork East TD Seán Sherlock implored the Government to take action on a windfall tax on profits for energy companies as is being done in Europe.

“I welcome the fact the Government has finally come around at least to evaluating, to use the Minister’s word, a windfall tax on extraordinary profit,” said Deputy Sherlock.

“This is a proposal the Government voted against in January when the Labour Party included it as part of our cost-of-living motion. We know energy companies like the ESB, which are not immediately tied into rising prices, made €679 million in profits last year, as thousands of homeowners struggled to pay soaring energy bills. This week, ESB’s Electric Ireland will go ahead with a near 25% increase in electricity and gas prices. We know that a conservative estimate, based on 2020 figures, suggests this could raise to the tune of €60 million to help pay for cost-of-living supports for households.

Deputy Sherlock rejected the delay of the Government from Minister of State Sean Fleming.

Minister Fleming said:

“Windfall taxes on energy companies require careful consideration. A windfall tax could create unintended consequences. For example, it could disincentivise investment in renewable energy generation, as there would be uncertainty on profits returned for generators entering the market. Interventions such as windfall taxes may have the potential to reduce the energy costs for consumers through redistribution of additional tax revenues, but they may also themselves be a driver of costs to consumers in that, if a company’s tax rate changes, it will factor that into its return on its investment and it will potentially add to the amount it will want to charge for its product. I must stress it is a two-way situation.”

“It is a complex area. I have stressed that our corporation tax, which is 12.5%, is clear and simple, and the more variations we have to it, the more complicated it is. We are working with the European Commissioners and other member states to consider a policy proposal, outlined under REPowerEU, designated to aid consumers and businesses to deal with increasing costs of energy. The best long-term approach for Ireland is to insulate consumers from volatility on the international wholesale market by investing in energy efficiency and renewable energy.”

“Cutting our dependence on fossil fuels and generating power from our own renewable sources will ensure cleaner, cheaper energy into the future. I believe that is the direction in which we need to travel.”

Deputy Sherlock rejected that argument, saying that the policy was already in operation in Spain.

“That will not cut the mustard with the businesses and households I deal with in my constituency. The Spanish Government was able to do this. It introduced a windfall tax on energy companies last September, therefore, there is a precedent set in the European Union on this. I want to give some solace to the small businesses and householders in my constituency. The Spanish case is a clear example of how funds generated through the windfall tax are paying for the country’s VAT energy tax cut introduced in the same month last year. There is proof of concept and this tax is working in another EU member state. I ask that greater urgency be given to this concept, thereby bringing to fruition a windfall tax on profits.