Stanjura: Energy price compensation in Czechia will exceed extraordinary budget revenues this year

Compensation for high energy prices this year will exceed proceeds from the windfall tax and the levy on excess revenues from electricity generation. Finance Minister Zbyněk Stanjura (ODS) said on X. If windfall tax (WFT) revenues next year make up this difference, the government will consider shortening the tax period and no longer applying it in 2025, he added. He stressed that the cabinet is not considering extending the tax beyond 2025.

“The overall balance of all extraordinary revenues and expenditures is key to the government’s decision on the future of the windfall tax. In 2023, extraordinary spending on energy price compensation will certainly outweigh extraordinary revenues, leaving a deficit in the balance of the two items. But if, thanks to additional WFT revenues, we come close to a budget-neutral impact overall in 2024, we will consider shortening the tax’s three-year term,” Stanjura said.

“In any case, the WFT will not be extended. It was introduced with the sole aim of temporarily covering extraordinary expenses, not to become a permanent source of budget revenue for compensating ordinary expenses,” the finance minister added.

The state imposed the windfall tax on energy, petrochemical and mining companies, as well as large banks. It justified the measure by citing their unexpected revenues resulting from the sharp rise in energy prices and, in the case of banks, the significant increase in interest rates. Energy producers also pay a levy on revenues from electricity sold at prices above government-set thresholds for each energy source. Windfall tax revenues stood at 25.8 billion crowns at the end of October. The state has so far collected 17.3 billion crowns from the levy on excess revenues from electricity generation.

In its August forecast of fiscal revenues, the finance ministry said the state would collect 46 billion crowns from the windfall tax this year. The levy on excess revenues is expected to bring 18.5 billion crowns into the state budget this year. The document assumes that the levy on excess revenues will reach 200 million crowns next year and fall to zero in 2025. The state is expected to collect 17 billion crowns from the windfall tax next year and ten billion crowns in 2025.