Calls for windfall tax on energy companies intensify as Bord Gáis profits grow 74%

‘Obscene’ that customers are seeing crippling price increases amid huge rises in profits for utility companies, says Richard Boyd Barrett

There have been renewed Opposition calls for a windfall tax on energy companies in the wake of a 74 per cent growth in profits at Bord Gáis Energy.

Sinn Féin, Labour and People Before Profit have urged the Government to bring in such a tax to help ease the cost-of-living crisis at a time when energy companies have increased prices for households.

Last week Bord Gáis Energy’s British owner, Centrica, said its Irish subsidiaries’ operating profits grew 74 per cent in the first half of this year to £33 million (€39.4 million) from £19 million over the same period in 2021.

Sinn Féin finance spokesman Pearse Doherty said Bord Gáis Energy has brought in “massive” increases in the price of gas and electricity and households will “feel the pinch” more than ever before this autumn and winter.

“We all know the war in Ukraine is driving up the price of fuel on top of the energy spike in the wholesale market last year.

“But it is simply unacceptable that shareholders are profiting from these difficulties when households are facing having to make the choice between heating their home or putting food on the table.”

He called on the Government to introduce a windfall tax “on the excess profits of big energy companies and to redirect that money back into people’s pockets”.

Labour’s finance spokesman Ged Nash said the rise in profits for energy companies at a time when customers have been “slapped” with price hikes makes a persuasive case for a windfall tax.

The Louth TD added: “The windfall levy question is a major test for this Government.”

Last month Mr Nash tabled a Dáil question on how much the exchequer would yield if there was a new windfall profits tax on energy providers in scenarios where the tax rate on their profits was increased to 25 per cent; 27.5 per cent; or 50 per cent.

Estimates provided to him suggested the additional yield could be in the region of €90 million, €108 million and €271 million respectively for a full year.

Mr Nash said sums generated from a windfall tax could be ring-fenced to help households facing fuel poverty and for the retrofitting of homes.

People Before Profit TD Richard Boyd Barrett said it is “absolutely obscene” that utility company customers are seeing “crippling” price increases at a time when there is a “staggering rise in profits being made”.

He said a windfall tax and price caps on gas and electricity prices are needed.

“We need to put the need of people to have affordable heat and electricity ahead of the right of these companies to make super-profits,” the Dún Laoghaire TD said.

Government officials have been reviewing the idea of a windfall tax but the Coalition has so far played down the prospect of such a levy being brought in.

A spokeswoman for the Department of Finance said that the European Commission has confirmed that EU member states can consider imposing temporary tax measures on windfall profits of energy providers and use the revenue generated to provide consumers with relief from high prices.

She also said: “Changing tax rates or imposing additional levies on certain sectors could have unforeseen consequences.

“There is a risk of such taxes leading to higher consumer costs and negative impacts on investment in the energy sector, in particular in the area of renewables.”

She said proposals for a windfall tax must take into account wider energy policy, that some companies here are owned by the State, and “a change in dividend policy could be more effective in amending the amount recouped by these companies”.

Cormac McQuinn

Cormac McQuinn

Cormac McQuinn is a Political Correspondent at The Irish Times