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Fuel duty cuts in Europe outweigh EU windfall tax as oil companies announce huge profits
(Transport and Environment, 27 Oct 2022) EU’s €25 bn windfall tax on oil and gas does not cover the nearly €30 bn in taxpayer-funded cuts to fuel duty, which has propped up demand for oil.
The expected revenues from the EU’s windfall tax will not even cover the €29 billion oil companies benefit from in the form of fuel duty cuts[1], new Transport & Environment (T&E) analysis shows. In a year when oil companies have already earned nearly €70 billion in profits [2], T&E has called on governments to end fuel subsidies that are filling the pockets of oil majors and to tax them more.
Agathe Bounfour, oil campaign lead at T&E, said: “Governments have given away nearly €30 billion in taxpayer-funded cuts to fuel duty, which has propped up demand for oil. Yet, the EU’s planned windfall tax still leaves governments in the red. It’s no wonder that the CEO of Shell supports the EU’s plans. European leaders can end this imbalance by removing regressive subsidies and getting oil companies to foot the bill.”
Since Russia’s invasion of Ukraine, EU governments have subsidised oil consumption to the tune of €29 billion, as T&E’s tracker shows. While some government tax rebates were only conceived for an initial period of three months, many have extended them until the end of the year and into 2023. Subsidies are an ineffective way of curbing prices, says T&E, as they increase demand, putting further pressure on prices. In the long run, governments face ever increasing oil import bills. Fuel tax subsidies also predominantly benefit wealthier consumers and are not targeted at the most vulnerable households. Targeted measures are more efficient from a social and environmental point of view, a previous T&E analysisshowed [3].
Transport and Environment, 27 Oct 2022: Fuel duty cuts in Europe outweigh EU windfall tax as oil companies announce huge profits
