Why Italy’s windfall tax on energy firms ‘doesn’t work’
Italy's economy minister on Wednesday pledged to change a tax on excess profits, after energy giants challenged the law and it failed to bring in expected revenue.
Italy's government will submit proposals to improve a system of extra taxes on energy companies’ massive profits because it "does not work", Economy Minister Giancarlo Giorgetti said on Wednesday.
In March, as energy prices began to rise with Russia's invasion of Ukraine, the previous government led by Mario Draghi began taxing the “excess” profits of energy companies to fund aid for households and businesses struggling with soaring prices.
READ ALSO: How Italy has avoided a huge hike in gas prices – for now
But while profits continue to soar, only "two or three billion" euros look set to be collected out of the targeted 10 billion euros, and "there has been litigation", Giorgetti told parliament.
The system "does not work, or works much less well than expected", said Giorgetti, while presenting parliament with an overview of the 2023 budget.
The new government will make proposals to "try to put in place a system that works and produces results", said Giorgetti, without giving any details.
The current system of calculating the tax has been contested by energy companies.
Energy bosses also said shortly after the tax was introduced that they were not concerned as the impact on their profits would be negligible.
“The impact for us is zero. It’s something between 7 to 10 million euros,” Italian energy giant Enel’s CEO Francesco Starace said in March.
READ ALSO: Italy’s energy giant reports huge profit as more price hikes expected
Energy companies across Europe have benefitted from price fluctuations in the market. Last month Italian energy giant Eni posted a better-than-expected net profit of 5.86 billion euros in its third quarter.
The European Commission announced in September it wanted to claim a "temporary solidarity contribution" from producers and distributors of gas, coal and oil.
Italy's next budget will include 21 billion euros in measures to support households and businesses in the face of high energy prices, confirmed Giorgetti.
The government has taken on additional debt on to finance those measures, meaning Italy raised its 2023 public deficit forecast last week to 4.5 percent of gross domestic product (GDP) - above the 3.4 percent forecast in September.
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Italy's government will submit proposals to improve a system of extra taxes on energy companies’ massive profits because it "does not work", Economy Minister Giancarlo Giorgetti said on Wednesday.
In March, as energy prices began to rise with Russia's invasion of Ukraine, the previous government led by Mario Draghi began taxing the “excess” profits of energy companies to fund aid for households and businesses struggling with soaring prices.
READ ALSO: How Italy has avoided a huge hike in gas prices – for now
But while profits continue to soar, only "two or three billion" euros look set to be collected out of the targeted 10 billion euros, and "there has been litigation", Giorgetti told parliament.
The system "does not work, or works much less well than expected", said Giorgetti, while presenting parliament with an overview of the 2023 budget.
The new government will make proposals to "try to put in place a system that works and produces results", said Giorgetti, without giving any details.
The current system of calculating the tax has been contested by energy companies.
Energy bosses also said shortly after the tax was introduced that they were not concerned as the impact on their profits would be negligible.
“The impact for us is zero. It’s something between 7 to 10 million euros,” Italian energy giant Enel’s CEO Francesco Starace said in March.
READ ALSO: Italy’s energy giant reports huge profit as more price hikes expected
Energy companies across Europe have benefitted from price fluctuations in the market. Last month Italian energy giant Eni posted a better-than-expected net profit of 5.86 billion euros in its third quarter.
The European Commission announced in September it wanted to claim a "temporary solidarity contribution" from producers and distributors of gas, coal and oil.
Italy's next budget will include 21 billion euros in measures to support households and businesses in the face of high energy prices, confirmed Giorgetti.
The government has taken on additional debt on to finance those measures, meaning Italy raised its 2023 public deficit forecast last week to 4.5 percent of gross domestic product (GDP) - above the 3.4 percent forecast in September.
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