"Astounding Profits from High Oil Prices... 'Monstrous Greed' UN Secretary-General Urges Oil Companies to Introduce 'Windfall Tax'"

"Countries Must Collect Money to Help Vulnerable Groups"
UK Taxes 25% of Energy Firms' Excess Profits... Korea Also Discussing Introduction

On the 3rd (local time), Ant?nio Guterres, the UN Secretary-General, urged the collection of a 'windfall tax' to help vulnerable groups. The photo shows Secretary-General Guterres holding a press conference at the UN Headquarters in New York, USA, marking one month since Russia's invasion of Ukraine last March. [Image source=Yonhap News]

[Asia Economy Reporter Yoon Seul-gi] Discussions on imposing so-called "windfall taxes" (excess profit taxes) on oil companies that are making astronomical profits amid the recent high oil price situation are gaining momentum. Following the United States and Europe, Ant?nio Guterres, the UN Secretary-General, also raised his voice in favor of introducing windfall taxes.

Secretary-General Guterres stated at a press conference on the publication of the Global Crisis Response Group (GCRG) report held at the UN Headquarters in New York on the 3rd (local time) that the combined profits of major energy companies in the first quarter of this year reached $100 billion (130.95 trillion KRW), and argued that windfall taxes should be introduced.

He said, "It is immoral for oil and gas companies to reap record profits from this energy crisis behind the backs of the poorest people and communities," and emphasized, "I urge all national governments to tax these excess profits and use the funds to help the most vulnerable people during difficult times."

Secretary-General Guterres also criticized oil companies, saying, "This monstrous greed is punishing the poorest and most vulnerable people while destroying our only home (Earth)."

These remarks are related to the fact that major oil companies have recently posted huge earnings due to the impact of high oil prices. The energy shortage caused by Russia's invasion of Ukraine has allowed oil companies to enjoy significant windfall profits. The combined profits of the world's top 1 to 5 oil companies in the second quarter have already reached $60 billion (78.57 trillion KRW). As a result, there are calls in various countries to impose windfall taxes on energy companies to support vulnerable groups suffering from the energy crisis.

Some countries have already introduced windfall taxes. The United Kingdom taxes 25% of excess profits on energy companies such as oil and gas firms. Italy decided to levy a 25% windfall tax on energy companies that earned more than 5 million euros (about 670 million KRW) from October last year to March this year. In the United States, a bill proposing an additional 21% federal tax on oil companies with excess profits exceeding 10% has been introduced and is under discussion.

Discussions on windfall taxes are also underway in South Korea. On the 1st, the Minsheng Priority Practice Party of the Democratic Party held a "Refining Industry Meeting for Sharing the Pain of the People Due to High Oil Prices" at the National Assembly with the four domestic refiners SK Energy, GS Caltex, S-Oil, Hyundai Oilbank, and the Korea Petroleum Association, emphasizing the need to share the pain by mentioning windfall taxes.

On the 2nd, Yong Hye-in, a lawmaker from the Basic Income Party, announced plans to propose the "Korean-style Windfall Tax Law" (amendment to the Corporate Tax Act). The amendment proposes imposing a corporate tax of 50% on excess profits for refiners and commercial banks. Lawmaker Yong explained, "The windfall tax is not a system to take away legitimately earned profits from companies as taxes, but a system to have society reclaim part of the huge windfall profits obtained regardless of effort due to rapid environmental changes."