A windfall tax on profits by Irish energy companies would undermine investment and Ireland’s bid to become energy independent, Minister for Finance Paschal Donohoe has warned.
As the cost of international energy soars, so too have the profits of energy companies across the world and politicians across the political spectrum have urged the Government to introduce a windfall tax on their profits.
People Before Profit, the Social Democrats have endorsed the measure and even Fianna Fáil’s Billy Kelleher MEP has said it is worth considering.
However, speaking to Newstalk Breakfast, Minister Donohoe was decidedly cool on the idea:
“There are a number of difficulties with windfall measures that particularly look to focus on the energy sector,” he said.
“You’ve just mentioned the wind sector there. It is the wind and renewable energy sector that we need to supply additional energy to Ireland to make sure we don’t have the energy security issues that we have now.
“If we decide we’re going to tax the renewable sector and the wind sector more in the future, that runs the risk of undermining the very investment we need to become energy independent.
“Secondly, if you’re a small open economy like the Irish economy is, tax certainty and knowing what tax you’re going to pay in the future is really, really important.”
He admitted that people are concerned about soaring profits in the sector while many struggled to pay their bills but warned “there are significant consequences to measures like that.”
Disagreement
Mr Donohoe’s remarks hint at tension within the top rank of coalition ministers as they draw up proposals for the autumn budget; Tánaiste Leo Varadkar has echoed Mr Donohoe’s remarks and warned that such a measure could “weaken the capacity of state-owned companies to invest in renewables and the grid”.
While last week Taoiseach Micheál Martin promised that the Government would “give examination to the issue of a windfall tax".
All of which means industry insiders should only expect a final answer when the minister gets up to deliver his budget in the Dáil next month.
Main image: A split-screen of Paschal Donohoe and a gas hob.
