Memo on introducing energy windfall tax to be brought before Irish ministers

A memo is to be brought before Irish ministers on Tuesday on introducing a temporary windfall tax, it is understood.

It is to come before Cabinet following agreement by EU energy ministers on implementing the emergency levy in response to huge profits being made by energy companies.

The EU’s windfall tax aims to redistribute profits made in Europe’s energy sector amid a crisis fuelled by Russia’s invasion of Ukraine.

The measure would include a cap on all market revenue on non-gas electricity generators and a temporary solidarity contribution for fossil fuel producing companies.

Environment Minister Eamon Ryan said Ireland could receive in the region of one and two billion euro if such a tax was introduced.

Tanaiste Leo Varadkar previously indicated that a tax on profits would be backdated so as to apply for the full year.

The EU has suggested that a temporary cap be placed on the revenues of electricity companies, which could raise 140 billion euro to help people hit hard by high energy prices.

The tax would work by placing a revenue cap on the price of electricity per megawatt hour, with the government collecting any amounts above that cap.

As part of EU plans, EU countries have also been asked to reduce energy demand during peak hours, with the aim of reducing overall electricity demand by at least 10% until March 31 next year.

Under the Irish Government’s one-off measures to help people with the rising cost of living, three 200 euro energy credits are being paid per household over the winter months.

But opposition parties have increasingly argued that this will not be enough to insulate customers from spiralling energy costs as the winter months drag on.

Further details on how the windfall tax will work and how the revenues it raises will be distributed to those most in need will be unveiled post-Cabinet on Tuesday.