Czech finance minister Stanjura will not propose ending windfall tax early

Finance Minister Zbyněk Stanjura (ODS) will not propose that the government end the windfall tax early. He told reporters today that by the end of this year, the state’s total revenue from extraordinary taxes will not cover the costs it incurred during the energy crisis. Stanjura had previously made a balanced fiscal impact a condition for potentially shortening the windfall tax. The tax will therefore remain in effect next year, which, under the law, is the final year it is due to apply.

Stanjura had previously said he would support shortening the windfall tax by a year if it turned out that extraordinary revenues—the windfall tax and the levy on excess revenues from electricity generation—fully covered the state’s extraordinary spending. However, according to the Finance Ministry’s latest calculations, the state will end this year with a deficit of around 35 billion crowns on this balance.

„The deficit at the end of this year will be around 35 billion. I said that if extraordinary revenues and extraordinary spending were roughly equal, I would be prepared to propose it (the shortening), but they are not. Spending currently exceeds that revenue by a substantial amount, so I expect the law to be observed and the tax to apply for three tax periods, from 2023 to 2025,“ Stanjura said.

He said the draft state budget for next year will include revenue from the windfall tax.

Last year, the state collected 39.1 billion crowns from the windfall tax, while the levy on excess revenues brought in a further 18.5 billion crowns. By the end of July this year, windfall tax receipts had reached 18.2 billion crowns, and Stanjura said today that he expects collections for the full year to total 33 to 34 billion crowns.

The state imposed the windfall tax on energy, petrochemical and mining companies, as well as large banks. Its biggest payer is energy company ČEZ. The extraordinary revenue measures were intended to cover the state’s costs related to the energy crisis, including price caps on electricity and gas and support for companies with energy-intensive operations.