Windfall Taxes In Czechia Are More a Soft Breeze

Lobbyists are showing their strength in Prague. Media owned by Daniel Křetínský and Patrik Tkáč are whipping up the rhetorical theatre around the Czech windfall tax, and this was after it became clear the tariff will only be applicable from 2023. The EU should be wary of the impact of these powerful special interest groups.

On Wednesday 9 November, COP27 had its first thematic day focused on how to finance decarbonisation and initiatives that could help economies grow in sustainable ways. There have been many ideas put forward by the various governments and banks in attendance, but the fact of that matter is there will need to be $1 trillion a year in external financing for climate action by the end of the decade that would match rich countries’ contributions. One such way of meeting those needs could be windfall taxes addressing the skyrocketing prices of oil and gas over the past year, but lobbyists are fighting (and winning) battles to avoid this levy on energy companies and associated conglomerates across CEE.

Prague Paves the Way

Czechia became the first Central European country to turn a systematic windfall tax measure into legislation. The process has not been a smooth one as the sheer idea of turning windfall tax into legislation has from the onset been criticised by energy companies or outright ridiculed by the country’s influential establishment of pro-business and neoliberal commentators.

The very vocal decision of EP Commodities – the trading branch of the largest Czech energy company EPH – to leave the country as a reaction to the parliamentary approval of the windfall tax creates more of a media splash than it achieves in business terms.