Five Questions on Taxation of Super Profits of Big Corporations Demanded by Noobs and National Rally

Should big companies like TotalEnergies be taxed? Substantial profits in these troubled times? The question has come up in recent weeks, particularly in the National Assembly. When Parliament rejected a proposal for a tax on super profits in August during debate on the revised Finance Bill 2022, Prime Minister Elizabeth Bourne said it did not. “close the door” Left and RN claimed this taxon. The economy minister, Bruno Le Maire, says he doesn’t understand what it’s all about. “I don’t know what it is”, he said before bosses this week. Francinfo brings its added value to the debate in five questions.

1What are we talking about?

The concept of super-profit, which is not really defined in economics, refers to substantial profits made by companies. The exposure has emerged in the public and political debate with the war in Ukraine and the significant profits of large oil and energy groups such as Total Energies, or NG. “The term refers to an exceptional increase in profitability in an operating sector following an external crisis, Economist Anne-Sophie Alsif explains. We’re talking about an atmospheric effect.”

These are Profits were made due to a situation independent of firms: war and inflationary conditions. Total Energies reported at the end of July a profit of 5.6 billion euros in the second quarter of 2022, a 159% jump in a year, thanks to higher oil and gas prices. BAssociate, LRising energy prices are putting millions of households at risk and forcing states to spend significant sums.

2How will this tax be implemented?

As super profit is a new concept we need to create a legal framework first. Representatives and senators rejected two amendments to the tax “fall profit” Large groups. “A sector must be defined, for example, taxation criteria must be imposed in relation to revenue or number of employees”, explains economist Anne-Sophie Alsif. It is still difficult to estimate the benefit of this line. “With no defined perimeter, it depends on where you place the cursor.”

>> Why do Total’s huge profits scare people?

3Which companies will be affected?

The tax actually only applies to a few oil and energy groups, notably TotalEnergies, Engie or shipowner CMA-CGM. In the Senate, the Socialist group tabled an amendment to tax the super profits of big gas and oil companies and maritime and motorway concessions.

CMA-CGM and TotalEnergies groups, which face the threat of special taxation, have already announced rebates to their customers at the end of July. The ship owner promised to reduce Freight charges of 750 euros per 40-foot container to France and abroad. TotalEnergies has guaranteed a discount of 20 cents per liter at all its service stations between September and November, and 10 cents per liter thereafter. From 1 November to 31 December.

4What do the government and the opposition say?

The executive is generally not in favor of such taxation. Illustrated by Elizabeth Bourne In an interview Parisian No “close the door” To this extent, he argues, it is complicated to know who makes the most profit. “I don’t know what super profit is”, for his part the Minister of Economy Bruno Le Maire ruled. According to him, “Total, CMA-CGM, Distributors, many companies have already made efforts to redistribute their earnings directly into consumers’ pockets.

>>Purchasing Power: We summarize for you the debates on taxation of super profits of large corporations.

On the left, La France insoumise and the PS are in favor of a shared initiative referendum on the matter. In July, a tax on the super profits of large groups was the flagship of the counter-plan. “aimed at responding to a social emergency” Nubs was worn. The Left Alliance is pleading for formation in 2022 and 2023 “Exceptional tax of 25% on super profits of oil and gas companies, shipping companies and highway concessionaires”. National Rally also defends tax on super profits.

5Which countries have already implemented this tax?

The UK, Italy and Spain have passed legislation to tax the profits of energy companies that profited from the crisis. Britain has introduced a temporary tax of 25% on the profits of oil and gas companies such as BP after weeks of negotiations. The tax makes it possible to fund a third of new social activities, generating around £5 billion a year.

In Spain, Prime Minister Pedro Sánchez has announced exceptional taxes on energy and financial companies in 2023 and 2024. About 3.5 billion euros per year over two years.

For its part, Italy at the end of May expressed its intention to raise its tax on super profits to 25%, the same rate as in force in the United Kingdom. At the end of March, the country imposed a 10% tax on the profits of big energy companies such as Enel or Eni, thanks to rising prices due to the war in Ukraine. Romania and Greece have imposed measures affecting energy groups.