Politicians are fiercely debating the taxation of high profits resulting from the crisis. Opinions also differ in the traffic light coalition. Financial advisers also turn on – with a clear message.
The introduction of a special tax on high additional profits from energy companies remains highly controversial in the coalition. The SPD leader Saskia Esken renewed the demand for such an excess profit tax in the ARD “Morgenmagazin” on Friday. It’s about companies that make excessive profits without their own performance and innovation, “i.e. making profit out of the crisis”. The state should skim off this in order to relieve citizens and small businesses.
A spokesman for Olaf Scholz (SPD) said at the beginning of August that an excess profit tax was not currently an issue for the Chancellor. Esken admitted that such a tax is not in the coalition agreement. But that is also the case with other measures that must now be taken in the crisis.
FDP General Secretary Bijan Djir-Sarai warned that such a tax would “massively damage” the business location. It would have enormous consequences for investments and jobs, said Djir-Saai in the ARD “Morgenmagazin”. Profits are already heavily taxed in Germany. With regard to an excess profit tax, the FDP politician spoke of arbitrary taxation that would open the door to further arbitrary measures.
Scientific Advisory Board advises against
Advisors to Federal Finance Minister Christian Lindner (FDP) also warned that an excess profit tax could be fatal for the innovative power of an economy. In a statement, the independent scientific advisory board at the Ministry of Finance “urgently advises against introducing a so-called excess profit tax,” according to the department. Delimiting “excess profits” and wanting to tax them on this basis leads to arbitrary burdens and distortions, the economists argue, according to the ministry.
According to the information, they also pointed out that economic activities and the resulting income are fundamentally exposed to random fluctuations. “In this random ebb and flow, there will inevitably be periods of ‘overprofit’ and periods of ‘underprofit’.” If the state were to argue during the periods of “excess profit” that this was unjustified and should be skimmed off for tax purposes, then investment incentives would decrease and welfare-enhancing activities would cease. Confidence in the tax system is also based on its compliance with rules. Those who generate positive income or profits are taxed: “The level of taxation is irrelevant in which sectors, with which products and in which phases of world events profits are made.”
In the current ARD “Germany trend” a clear majority of Germans are in favor of such a tax. 76 percent think they are correct, 19 percent reject them. Supporters of all parties, including the FDP, overwhelmingly agree. UN Secretary-General António Guterres had also called for greater taxation of energy company profits. Guterres called it “immoral” that oil and gas companies profited from this crisis with record profits.
Message from the Federal Ministry of Finance for a statement