The provision of state compensation aimed at mitigating the impact of soaring energy prices on citizens and company reimbursements due to price constraints will draw to a close by the year’s end. Zbyněk Stanjura, the Finance Minister representing the ODS party, revealed that extending this measure appears improbable due to evolving trends in the energy market. He added that forthcoming deliberations will center on the continuation of the windfall tax, colloquially known as the tax on extraordinary profits, which is closely tied to energy price dynamics.

Stanjura highlighted the gradual normalization of wholesale energy prices following the turbulence triggered by Russia’s invasion of Ukraine last year. As this trend trickles down to consumer costs, he posited that the need for compensatory actions in the upcoming year would be redundant. However, he anticipated that price caps could remain in effect until year-end to safeguard households from potential surges in electricity and gas expenses if their providers had yet to adjust their prices below the prescribed threshold.

Concurrent with the cessation of compensation efforts, Stanjura is preparing to initiate discussions about the potential continuation of the windfall tax in the following year. This tax, applicable to specific entities in the energy, petrochemical, and banking sectors, is currently set to span the tax period from 2023 to 2025 as per legislative mandates.

“I anticipate an in-depth discourse on the retention of the windfall tax beyond 2023,” Stanjura remarked. He added, “We have stipulated that the additional revenue is intended to offset supplementary expenditures. If such mitigating factors are not considered, the tax might not be applicable.”

The precise magnitude of windfall tax revenue remains uncertain, with corporations slated to make advance payments for the initial three quarters in September. The finance ministry initially projected a cumulative windfall tax income of CZK 85 billion while devising the state budget for the current year. However, due to the volatile trajectory of energy prices, this estimate was subsequently revised to CZK 28 billion in April.

Article by Prague Forum