Tánaiste in favour of windfall tax for energy companies despite concerns

He said the Government should give consideration to a tax on windfall profits
Tánaiste in favour of windfall tax for energy companies despite concerns

Kenneth Fox

Tánaiste Leo Varadkar has said a windfall tax should be levied on energy companies but that care must be taken not to do unintended damage.

As the Irish Examiner reports, he said the Government should give consideration to a tax on windfall profits.

“But we need to be very careful to make sure that if there is a windfall tax, that is on the windfall element of the profits,” he said.

“Bear in mind, what happens with regular profits of an energy company comes to the State, and we use that to invest in housing and healthcare and education, everything else, and it gets reinvested in the grid renewables.

"So any time you introduce a new tax or windfall tax, you need to be aware of the unintended consequences. If it's a tax on the windfall, that makes sense."

He noted, though, that if such a tax was applied to regular profits, there's a risk of taking companies away from investing in the grid, in new generation, and in renewables.

“That will be a short-term fix that actually creates a long-term problem,” he said.

International costs

He said it is important to acknowledge that the increasing price of energy is driven by international costs.

Speaking in Roscommon, Mr Varadkar said he agreed that introducing a new middle tax rate in isolation would be inequitable but that is not what is intended.

“If it was done on its own, that would be equitable, and I agree with that analysis, because in any budget, you'd never just have one tax measure or one welfare measure, you'd always have a tax package and a welfare package,” he said

"So if we no matter what we do on income tax, I don't think it can be just for one group.

“I do hear some of the opposition parties saying that we should only do targeted things for those on low incomes. I don't agree with that.

I think we need to have a universal approach where we help with help everyone the cost of living because everyone is feeling the squeeze, and yes, more targeted measures for those who need it most,” he said.

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