Energy companies in Poland face 60% windfall tax

Polish President Karol Nawrocki has signed a government bill introducing a tax on excess profits made by energy companies and restoring a fuel subsidy program. The PAP news agency reported the news. The president expects the law to lead to an immediate drop in prices at Polish petrol stations.

The new tax will apply to oil and gas companies benefiting from price rises caused by the conflict in the Middle East. The law stipulates that this year’s revenue from fuel sales exceeding last year’s average by 20 percent will be subject to a 60 percent tax, Reuters reports.

Polish Prime Minister Donald Tusk said the proceeds from the tax would be used to lower prices at petrol stations. Finance Minister Andrzej Domański said prices should fall by 1.2 to 1.3 zlotys (roughly six to seven Czech crowns) per litre as early as this weekend.

“Prices at petrol stations must be lowered immediately,” President Nawrocki said.

“Every zloty raised under this law must be used to lower prices,” he added.

The president refused to sign the original version of the government’s bill in July and asked the constitutional court to review it. The presidential office argued that the bill violated the constitutional ban on retroactive taxation, PAP reports.

The conflict in the Middle East, triggered in late February by US-Israeli attacks on Iran, has led to a sharp rise in fuel prices around the world. This has brought high profits to oil companies, including Polish energy group Orlen. Consumers, meanwhile, are having to contend with high prices at petrol stations.

The Czech government reinstated fuel price regulation on 1 October. As in the spring, the finance ministry is now setting maximum petrol and diesel prices daily, based on the average exchange price and a regulated retailer margin of CZK 2.50 per litre of fuel. The state has also cut the excise duty on diesel. The government has also decided to impose a windfall tax on refineries, which will apply this year and next.