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TotalEnergies Still at Risk From French Windfall Tax on Profits
(Bloomberg) -- TotalEnergies SE still risks facing a tax on windfall profits from the government later this year, even after the energy giant agreed to lower fuel prices in France.
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Several lawmakers from President Emmanuel Macron’s Renaissance party and from the conservative Les Republicains back hearings after the summer to gauge whether parliament would support taxing extra profits made by energy and shipping companies on the back of rising energy and freight prices. Both parties usually want lower corporate taxes to make the French economy more competitive.
“There’s no reason why we shouldn’t look into a one-off and targeted contribution,” Stella Dupont, a lawmaker from Macron’s party in the lower house of parliament, said in an interview. If adopted, the measure could be introduced in the 2023 budget law.
TotalEnergies Sets Stage for Fresh Earnings Records: 2Q Preview
Total is among firms that have been singled out in political debates for benefiting from higher energy prices, and given the impact they have on setting gasoline prices in the country. With the company expected to report record earnings and cash flow on Thursday, the tax debate is likely to make a comeback, as will calls for more measures to soften the impact of inflation on households.
Bowing to pressure, Total and shipper CMA CGM SA agreed last week to lower prices at the pumps of its service stations in France and to grant bigger rebates on freight prices. Following Total’s announcement, the lower house rejected a windfall tax proposed by the left, but in a very close vote.
Finance Minister Bruno Le Maire has opposed the idea of new taxes affecting corporations including a windfall tax. He told France Inter radio earlier Wednesday that tax levels in France are so high that “we can’t allow ourselves to raise tax more.”
Price Reduction
A spokesperson for the finance ministry declined to comment on the fact-finding mission that could conduct hearings in the fall.
A spokesperson for Total reiterated that it has committed to a large-scale fuel-price reduction for all of its service stations in France, until year-end. The company prefers to make an immediate and direct contribution to its customers, rather than an indirect tax which would penalize its refineries, the spokesperson said.
“On the right, it’s not in our DNA to advocate for more taxes,” said Veronique Louwagie, a lawmaker for Les Republicains who co-chairs the finance committee of the lower house. “But exceptional situations call for exceptional answers.” She pledged to take “a deep look into Total’s results.”
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