Government Prepares New Windfall Tax After Summer Break

Energy Minister Miłosz Motyka announced that a new legislative draft targeting excessive profits of fuel and gas companies will emerge this autumn following presidential resistance.

New Windfall Tax Coming This Autumn

A new regulatory draft concerning a windfall tax on fuel and gas corporations is set to appear in the autumn, announced Energy Minister Miłosz Motyka. The government promises not to repeat the project previously sent by President Karol Nawrocki to the Constitutional Tribunal, but will instead present new solutions. The levy is intended to cover companies whose profits exceeded the previous year’s level by 20 percent, with collected funds designed to protect citizens from extraordinary losses.

The new draft regulations regarding the windfall tax on fuel and gas corporations may appear in the autumn, Minister of Energy Miłosz Motyka reported on Wednesday. He added that the government will not repeat the previously prepared provisions which the president did not sign.

Details of the Previous Bill

On July 24, President Karol Nawrocki referred the fuel company extraordinary profits tax act to the Constitutional Tribunal under preventive control. The windfall tax revenues, estimated at PLN 4 billion, were meant to finance the government’s “Lower Fuel Prices” package.

Energy Minister’s Stance on Corporate Profits

We do not understand this decision by the president and I agree with President Donald Trump, who stated that in situations of energy crises, energy enterprises through various actions generate extraordinary profits at the expense of citizens who generate extraordinary losses, Motyka told Radio ZET. This is not only a matter of the oil market, but also the gas market, and as a ministry, we are analyzing the situation in terms of how these profits are currently shaped within these enterprises.

Asked when the next draft regulations on the windfall tax would appear, he said it would be in the autumn. He added that analyses on this matter are already underway at the Ministry of Energy.

Thresholds and Design of the New Tax

Motyka emphasized that the project would cover excessive profits, meaning those that are more than 20 percent higher than the previous year. I believe it is worth approaching this issue once again, taking into account probably some related issues raised by the president in his decision, the head of the Ministry of Energy added.

He noted at the same time that the government will not repeat the same project and will approach the issue differently.

Pressure on Fuel Stations and Possible Regulations

The minister also addressed the mechanism whereby fuel stations quickly raise prices for drivers when wholesale fuels become more expensive, but introduce reductions slowly when wholesale prices fall.

This is also an element of pressure that fuel corporations should feel, especially regarding the Orlen concern. This pressure comes from the Ministry of State Assets, which exercises supervision. It is not excluded that this issue should be approached legislatively so that these increases are limited in some way. In the European Union, various models are being undertaken. I do not exclude such action here either, Motyka conveyed.

He noted at the same time that retail prices have fallen over the last few days compared to the previous week, but—according to the head of the Ministry of Energy—they should be significantly lower still.

Presidential Justification for Constitutional Review

President Nawrocki argued his decision to send the act to the Constitutional Tribunal by stating he would not sign a law against which serious constitutional doubts exist. The law is to enter into force in August, but the tax would cover income obtained already from the beginning of March. This means an attempt to tax activity with retroactive effect, the president indicated, as quoted in the statement. He noted that one of the fundamental guarantees of freedom in a state of law is expressed in the Latin formula: Lex retro non agit, meaning law does not act retroactively.