Nobel laureate economist Joseph Stiglitz told AFP that a windfall tax on oil firms is needed to 'help those suffering' from inflation

Stiglitz says oil companies have done nothing to deserve the windfall

Nobel Prize-winning economist Joseph Stiglitz told AFP a contingency tax on oil companies is needed to “help those who are suffering” from inflation – Copyright AFP JOEL SAGET

Ali BEHTAUI

Nobel Prize-winning economist Joseph Stiglitz believes that the world’s energy giants should pay a special tax on their huge profits. In his view, the companies “did nothing to deserve” the windfall.

Oil and gas companies have made huge gains this year as energy prices surged on supply concerns after Russia, a major fossil fuel producer, invaded Ukraine in late February.

“Sometimes we have a discussion about whether the profit is exploitation or the profit is due to the fact that we have invested more and put in more effort,” Stiglitz said in an interview with AFP in Paris.

“This is a special case where there is no debate,” said the 2001 Nobel laureate.

“It is clear that the oil companies have done nothing to deserve the high oil prices. The source of the problem was[Russian President Vladimir]Putin’s invasion of Ukraine,” Stiglitz said.

The main international oil contract reached almost $140 a barrel in March, although it has since fallen below $100. In the same month, gas prices jumped to a record 345 euros per MWh.

US oil giants ExxonMobil and Chevron posted record second-quarter profits of $17.9 billion and $11.6 billion, respectively.

British oil company Shell quintupled its net income to $18 billion over the same period.

France’s TotalEnergies and Italy’s Eni also released earnings reports.

“There is an obvious answer. Tax windfall gains and use a portion of the proceeds to help those who are suffering,” Stiglitz told AFP at the Paris School of Economics.

– inflationary crisis –

The 79-year-old American economist has been advocating for years to reform international tax rules so that large corporations pay their fair share.

He is co-chair of the Independent Commission on the Reform of International Corporate Taxation (ICRICT), an organization that aims to end tax havens.

ICRICT, which held a conference in Paris on Friday, released a report calling for emergency tax action, “especially on companies profiting from the (inflationary) crisis.”

Some countries have taken their own measures.

The Spanish government announced temporary taxes on banks and energy companies in July to cover the cost of government measures to help Spaniards cope with sizzling inflation.

In May, the UK introduced a temporary 25 percent contingency tax on large energy companies, expected to bring in £5 billion.

Italy has a similar rate.

The European Commission this week announced plans to raise 140 billion euros by capping electricity producers’ revenues.

Although the United States is not as dependent on Russian energy as Europe is, fuel prices have risen there as well, and oil companies have made huge profits.

“All that’s happening is a redistribution from consumers to wealthy fossil fuel companies,” said Stiglitz, a former World Bank chief economist and White House economic adviser during Bill Clinton’s presidency.

– Global Tax –

But Stiglitz says energy companies are not the only companies to face new taxes.

The ICRICT report said international firms – “particularly in fuels” as well as food, pharmaceuticals and finance – have raised prices “well above” their higher costs.

The report states that these companies “thus made significantly larger profits than usual.”

According to Stiglitz, “there’s more going on than just passing on higher costs” to consumers.

More than 130 countries have signed an international agreement to introduce a 15% minimum tax on large corporations.

But the OECD-brokered deal “remains far from reality” as it is “stuck in a political stalemate in both the US and the EU,” ICRICT said in a statement.

Last week, Europe’s five largest economies, including Germany and France, said they would introduce the tax despite Hungary’s objections to a European deal.

“I have to say that it doesn’t look like it will be accepted, unfortunately, no matter how weak it is, no matter how pro-developed it is, no matter how distorted it is,” Stiglitz said.

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