Finance ministry on future of windfall tax
The Czech Ministry of Finance reports that the state's extraordinary revenues from tax on windfall profits and levies on surplus revenues and wealth gains have not yet covered its extraordinary expenses related to the energy crisis. Although not explicitly stated, it is thus not to be expected that the ministry will propose an early termination of the windfall tax to the government. Under current legislation, this tax should apply to calendar years 2023, 2024, and 2025.
In its earlier statements, the finance ministry made its proposal of an early termination of the windfall tax conditional upon achieving a balance between the extraordinary expenses triggered by the energy crisis and the one-off tax revenues that were to finance them. However, an analysis summarised in its statement shows that the balance between extraordinary expenses incurred from 2022 onwards and the so far generated extraordinary revenues of the state will be negative as at the end of 2024 and amount to CZK 35 billion.
In this context, the ministry regards items incurred in the 2022-2024 period, totalling almost CZK 130 billion, as one-off extraordinary expenses. These include, e.g., support for enterprises in energy-intensive sectors, a cost-saving tariff (i.e., a subsidy for energy costs for households), temporary waiver of fees to support RES, and extraordinary compensation.
To cover these expenses only revenues from windfall tax and levies on surplus revenues and wealth gains can be used. These revenues are expected to amount to CZK 95 billion over the 2023-2024 period.
Therefore, the proposed state budget for the next calendar year will most likely still count on windfall tax revenues.