The Excess Profit Tax Would Bring Around 100 Billion Euros to the EU Budget

Progressive regular taxation of excess profits from large companies would bring the European Union budget up to 107 billion euros annually, according to the latest research by the non-governmental organization Tax Justice Network.

Excess profits of the 209 largest and most profitable companies worldwide, as defined by the Organization for Economic Cooperation and Development (OECD), reached nearly two trillion euros in 2022, including 310 billion euros in the EU, the authors of the study calculated.

In 2022, the banking sector ranked first with 588 billion euros in excess profits, they state, highlighting the Italian bank UniCredit, Spanish Santander, and French BNP Paribas and Credit Agricole in the EU.

The energy sector follows with 549 billion euros in excess profits, the research shows, with Italian ENI and Austrian OMV singled out in Europe.

In third place are technology giants Apple, Microsoft, Alphabet, Tencent, and Meta with 312 billion euros in excess profits. The pharmaceutical sector took fourth place with nearly 100 billion euros and European ‘leaders’ Novo Nordisk, Sanofi, and Merck.

– Large companies and their owners surpass most states in economic resources and are a major source of inequality – the authors of the study emphasize.

– This inequality and concentration of power threaten the functioning of the free market as the largest companies, thanks to excess profits, can spend more than their competitors and grow even larger. They also threaten democracy as money buys power – they warn.

The spike in gas and oil prices brought the energy sector around 200 to 300 billion euros in excess profits at the expense of customers in Europe, and the EU collected about 20 billion euros of that money through ‘solidarity contributions’, the authors of the study state.

Given the high price levels, there is little chance for a new profit surge, but numerous large companies across various sectors continuously report profit margins above expected values in competitive markets, they point out.

– The acute crisis has since ended, but the outlines of new ones are emerging – they warn, suggesting to Brussels to ‘institutionalize’ the excess profit tax for all large companies at the EU level, which could finance more than half of the budget.

Progressive taxation of excess profits at rates of 20 to 40 percent could bring approximately 107 billion euros annually to the budget, they calculated.

A group of 25 leading oil companies would pay around 25 billion euros in taxes annually, Microsoft four billion, and the French luxury goods manufacturer and American tobacco giant Philip Morris one billion euros annually, the research showed.

The money could be used for public investments, alleviating inequality, and financing the green and digital transition, they remind.