Tax strategy consultants are preparing a program that will allow the government to levy a windfall tax on energy companies.
It is understood that a similar policy to that introduced in the UK could bring in €60m.
Irish proposals are now being drawn up in a framework involving the Tax Strategy Group, which advises on budgetary matters.
Italy and Spain both imposed a 25 percent tax on utilities.
The UK government has turned around to introduce an unexpected tax, with the details of its legislation being carefully scrutinized by officials in Merrion Street. A similar step here could bring in €60 million, which could, for example, bring 65,000 additional households into the fuel subsidy scheme.
Under the policy under study, energy companies could be tapped for a higher proportion of their profits but prevented from passing fees on to customers.
The funds would support planned inflation relief for households in the September budget, including covering record-high utility bill costs.
The proposals for similar windfall taxes in the UK, Spain and Italy came amid public unrest over record profits announced by some energy companies.
However, profitability varies from company to company.
State-owned ESB, which in turn owns Electric Ireland, reported a sharp rise in earnings in its most recent 2021 accounts and SSE, which owns Airtricity, has announced strong earnings since the energy spike began last year.
Profits at Bord Gáis Energy fell last year, partly due to a power plant outage, while at least three suppliers, including Spanish energy utility Iberdrola, Bright Energy and Glowpower, have pulled out of the Irish market in recent months, citing rising wholesale trade energy costs.
Ireland’s electricity pricing model means suppliers that feed electricity from renewable sources into the grid have high revenues without large input costs, but companies that buy electricity wholesale or buy gas and oil to generate electricity are under more pressure.
Micheál Martin said last week a levy is something the government would consider.
“We’ll keep an eye on it. There are pluses and minuses.
“ESB is a state-owned company and we receive a dividend from it. The dividend has been increased.”
Tánaiste and Fine Gael leader Leo Varadkar advocates a windfall tax, saying it makes sense at a time of unusually high profits.
Similarly, Green Party leader and Energy Secretary Eamon Ryan has refused to rule out a multimillion-euro government levy on record-breaking energy companies.
“We have to do that by next fall, and winter will be the particularly difficult time,” he said.
“So I will work with (Finance) Minister (Paschal) Donohoe and see what action is needed to help further.”
The European Commission has given EU member states the green light to introduce a windfall tax on what it calls “the supernatural profits of energy companies”.
https://www.independent.ie/business/irish/government-plans-being-drafted-for-windfall-tax-on-energy-companies-41846870.html Government plans for unexpected taxes on energy companies are being drawn up