Bríd Smith Demands Expanded Windfall Tax on Pandemic Profiteers

Thank you. Thanks very much for your contribution and for being here with us this morning. Just one thing jumps out at me from what we're discussing in relation to not just the EU situation but the global situation on energy and the profiteering that has gone on. I think it's clear that the profiteering started before the war in Ukraine, the sort of profit margins increasing by like 64% for some of the fossil fuel industries in particular. And that this price gouging does have to be taken back and given back to people who are really suffering because we do see people suffering as a direct result of how the market has worked and in particular the anomaly where aspects of the market like wind energy and nuclear can gain a huge amount of profit on the back of the competition for fossil fuels. But that said, they are all making vast profits and there's a question I'd like to ask you about what you're calling the solidarity contribution we call a windfall tax, profit tax, that this should be actually expanded. Would you agree that this should be expanded to include other industries like tech, pharmaceuticals and agri-food who profiteered vastly during the pandemic and since and where we see inflation in these areas, massive inflation, that they should also be returning a windfall tax, profit tax back to society? Would you agree with the contention that the crazy situation that the market has thrown up where these anomalies result with the companies who have absolutely had no extra costs, i.e. the nuclear and the wind energy and solar energy companies have no extra costs, are profiteering massively because of the way the market structure has helped. And that deregulation of the energy sector and that deregulation is a big number of other industries have driven to get into. It has led to this massive price gouging. We can see that that, 20 years on, that deregulation, I believe has been a massive mistake, and I'd like to hear the EU opinion on that. I know you are not going to go, oh yes, we made a huge mistake there and we are going to rectify it immediately, but perhaps you could give us some critique on why the deregulation of the market has led us to where we are at and how we may be seeing some countries try to return to controlling the energy market. There is a technical question on the proposal itself. Number one, why are you seeking only a 75% tax on the excess profits? Why not 100%? Because they are excess and they are vastly excess over and above what was made. And then I just want to ask you about the losses that can and can't be taken into account when calculating what is called the temporary solidarity contribution. So in describing the heads of the bill, it says that losses outside of the period 2018 to 2023 cannot be carried forward or back. Group relief will not be included. Capital expenditure in the period 2018 to 2023 will not be deductible. But then it goes on to suggest that losses and capital expenditure for 2018, 19, 20 and 21 will be taken into account. Can you clarify for me, will the structure allow losses for the previous years, 18 to 21 in particular, be taken into account before these windfall profits were being made? And there seems to be, for me, I could be reading it wrong, but for us there seems to be a contradiction in terms of the heads of the bill. Yeah, I think that is really it. I really do want to emphasise to see what your opinion is on the deregulated nature of the market right across the EU. Thank you, Deputy Smith. Ms Siegel-Magne, go ahead. Many thanks for the questions. So we do, we do certainly agree that the revenues collected by either of the measure should go back to help those that are indeed suffering from the high prices, be they households or certain companies, SMEs in particular and vulnerable households in particular. The question of the solidarity contribution and its application to the sectors that we have in the in the in their law, namely the fossil sectors. I mean, we have proposed a law which is addressing the problem at the root. So where in the energy sector, where these high prices stem from, and they stem from the fossils, they stem from in particular from the gas that then also had impact on coal and oil, and then obviously on electricity. And therefore, given the exceptional nature, given the exceptional situation that it is addressing, we did not propose and have not considered expanded it to other sectors like pharma and the ones that you that you mentioned. So we have to keep in mind that this is a solidarity contribution in a very exceptional situation, which is of coming from the energy sector and from the fossil part of the energy sector, stemming also from the Russian war in Ukraine. Again, here I would want to say that if a member state wants to apply a different taxation policy, taxation being a national competence is obviously something that you may wish to consider in line with the general rules that may be applicable there. Then on the companies that had, or maybe just one, sorry, before I move into that, the question of the level of the excess profit 75%. I mean, we did keep there some, I mean, this is not an exact science in determining the excess revenues that those companies received. And that's why we also have the different rules on the average of the past five years, how we propose to take into account possible losses during those years. But this is not an exact science in the sense that we would go into every detail, every year of a company books, and therefore 75% gives a benefit of a doubt also for the company that we are not over recovering the extra profits that they have received during the B22 or 2023. Then on the electricity market, renewables and nuclear. What I would say is that our market, our market, which is based very much on the shorter markets and day-ohite market and intraday markets has worked actually quite well during the crisis, even, and even better before the crisis. And here I would want to give some examples. So first of all, the high prices don't only reflect production costs, and production costs obviously were very high for gas produced electricity, but the high prices also reflect scarcity in the market. So we, in the course of 2022, lost a big part of our gas supply, that large part which is then used for electricity production, creating an important scarcity. In addition to that, there were half of French nuclear reactors in maintenance, so they they were not producing as usual. The year was extremely dry in the Iberian Peninsula and in the north, in the very north, so the hydro power that normally one can rely on was not coming on stream, meaning that we had important scarcities in the electricity sector as well. And yet the market worked. There was electricity everywhere in the EU, despite these difficulties. And here France, which has been in the past one of the important exporting countries, became an importing countries. And hadn't the price, high prices, been there as an indicator that France needed to import electricity. We could have had a situation where as not as having electricity all the time as we had this winter. So the market has worked well in providing electricity to where it is needed from where it is produced. But, and that is something we have taken up in the electricity market design proposal that was tabled a month ago. This short-term market, so day ahead and intraday market, needs to be complemented by longer term price signals. And this is where we have also looked at member state practices. And member states, for instance, in the Nordic market, have 80% even in some of them in long-term markets where electricity is sold ahead for three years or even longer on a stable price. And this is what we have proposed now in the electricity market design to bring this long-term market and long-term price signals to the whole EU through these public private purchase agreements between private operators. So those who produce and those who consume electricity. Government-backed contract for difference that also then determine a strike price. And if the price market price goes above it, then that would be a return to consumers. And also a better possibility to protect one's price, so through hedging. We also propose to have these hedging markets which today are liquid only in the Nordic market and in Germany. So we also propose to make this Europe-wide so that companies can have their price protected, whether they are selling electricity or whether they are buying electricity. And not only companies, including households through their suppliers. So we would say that the market has worked well. It has ensured secure supply and it has ensured the best prices even if they were very high in a situation of extreme scarcity last winter. But indeed we need to create this long-term price signal. And then in addition, there are measures whereby we also require member states to protect consumers better by, for instance, making sure that consumers can also have access to longer-term fixed-price contracts, not only dynamic contracts. So that consumers would have a choice according to their consumption and risk perception. They would in every member state should be also a supplier of last resort in case suppliers go leave the market. And then again in a crisis situation, member states would be allowed to regulate retail prices if prices again one day become extremely high and are not something consumers can afford to pay. I think on your questions on the losses and the capital expenditure, I would need to come back to you separately that is going into details that I would need to dig into. Apologies for that. Thanks very much. It's kind of an important detail because it looks like to me that they may be able to offset, companies may be able to offset paying the solidarity tax against losses even though it states it shouldn't be able to do so. There's a contradiction there in the heads of the bill. And I think your definition of a market working is very limited because it works in terms of supply, but at the same time, probably millions of people suffered under the strain of very, very heavy energy prices while profits went through the roof. And that's to me is market not working. Okay.