SPD leader Lars Klingbeil considers it “worth considering”, his party colleague Andreas Bovenschulte is a step further on the subject of “excess profit tax”. Bremen’s mayor wants the Bundesrat to vote on such an additional tax on war and crisis profits from companies as early as next Friday.
WORLD: Mr. Bovenschulte, the federal tax estimators have just announced that the state can continue to count on record revenues despite all the crises – you come around the corner with the demand for an additional tax for companies that are currently earning a lot. How does that fit together?
Andreas Bovenschulte: I see no contradiction there. In general, companies that earn a lot should not be additionally taxed. It is only about those companies that are making particularly high profits simply because of the war in Ukraine. Profits that are not based on your own achievements, but simply on a change in the political and economic framework. In these cases, additional taxation is only fair.
Because the state – ultimately the taxpayers – is spending billions at the moment to support those who are suffering from the high prices, especially the high energy prices. At the same time, there are a few companies that are massively enriching themselves due to the current situation. Shamelessly digging into the pockets of citizens and many other companies. It is a question of economic reason and fairness to recover at least part of these special profits in order to use them to finance the necessary relief packages.
WORLD: This suggestion sounds a lot like socialist mothballs: bad corporations stuff their pockets full at the expense of the citizens, the state would rather help than rescuers in need. Is that really your picture of the current distribution of roles in society?
Bovenschulte: It has nothing to do with socialism. At its core, the excess profit tax is an ordoliberal instrument designed to contain certain negative excesses of the market economy, nothing more and nothing less.
And indeed, in Europe it is currently primarily liberal and conservative governments that are using this tool. The British cabinet under Boris Johnson, who really isn’t particularly fond of socialism, is counting on it. The conservative Greek government. Also Mario Draghi, the Italian Prime Minister and former ECB President. And so far I haven’t noticed him as the left chief protagonist.
WORLD: Which companies should pay this “excess profit tax”?
Bovenschulte: You will see that at the end of 2022. Then it is clear which companies have benefited in the way mentioned, and then the accounts are settled. But we don’t need to beat around the bush. The massive increase in prices at the pumps in recent weeks can certainly not be explained by the development of crude oil prices.
The mineral oil companies are currently earning themselves a golden nose. However, I do not rule out the possibility that other sectors will also use the war against Ukraine to push through price increases and maximize their own profits.
WORLD: How do you want to prove to the individual companies that they not only pass on the increased costs to their customers, but also enrich themselves in an immoral way?
Bovenschulte: It is conceivable, for example, to compare the average profit of a company in the years before the war began with the profit since the war began. If it turns out that profits have jumped massively since the beginning of the war without any objective reason being apparent, then there is excess profit. Other methods of determining excess profits are also discussed, each with their advantages and disadvantages.
In individual cases it can be difficult to differentiate between normal profits and excess profits, but in the end it is like always in life: where there is a will, there is a way. This is shown by the examples of Italy, Great Britain and Greece.
WORLD: There have always been windfall profits, i.e. profits that result from unforeseeable events. Grocery retailers, to name just the most recent example, have benefited quite well from the Corona crisis. Not to mention the logistics companies and parcel services. Why did you let that go through?
Bovenschulte: In these cases, one could certainly have debated an excess profit tax. However, the profiteering at the expense of the general public did not seem as blatant to me as it does today. In addition, as recently as March of this year, the European Union issued a guideline on the possible taxation of excess profits in the energy sector. This is what really brought this instrument into the focus of political discussion.
WORLD: You also talked to the Chancellor and the other Prime Ministers about this topic last week. Did you find comrades-in-arms for your idea?
Bovenschulte: All countries have spoken out in favor of increased regulation of energy prices. The prime ministers of the SPD and the left have also expressly demanded that war-related profits be skimmed off. However, the colleagues from the Union did not want to support that.
WORLD: And the Chancellor? How did Olaf Scholz (SPD) comment on the subject?
Bovenschulte: He sees the problem, but he hasn’t decided on a solution yet. I can understand that. On the one hand, it is known that there are different opinions on this topic within the Federal Government. On the other hand, the various legal options for skimming off excess profits from the federal government must first be examined and evaluated in detail.
WORLD: At the most recent prime ministers’ conference, the federal states called for further relief for the citizens. What does that mean?
Bovenschulte: People with low incomes are particularly affected by the massive price increases. This includes many pensioners. It is therefore necessary that they, too, benefit from energy money, in contrast to what has been planned up to now. The quite remarkable percentage increase in pensions this year is no substitute for energy money, for the absolute increases in most pensioners are far too small.
WORLD: What chances of implementation do you give your Federal Council initiative?
Bovenschulte: Whether we get a majority for this in the Bundesrat certainly also depends on developments over the next few days. If the petroleum companies do not pass on all of the tax cuts to their customers, but only fill their pockets at the pumps, then the debate about taxing excess profits will continue to gain momentum.
However, if the companies were to change their minds under the impression of public criticism and actually keep a low profile, then our initiative would already have had a benefit – even without it becoming law. However, I really don’t like to believe that things will turn out for the better by themselves.
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