Pa Daly (Kerry, Sinn Fein)
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240. To ask the Minister for Finance if he has considered implementing a windfall tax on energy generators in response to rising wholesale prices in the gas and electricity market; and if he will make a statement on the matter. [10405/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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As a small open economy, connected to Europe, the US and the wider world, Ireland is committed to a competitive, transparent and stable corporation tax system. As the Deputy will be aware, the trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%, and under the Pillar Two Minimum Tax Directive the effective rate has increased to 15% for in-scope companies.

Imposing additional taxes or levies on certain sectors would involve increased complexity and could negatively impact the attractiveness of Ireland's corporate tax regime. While it is possible that imposing an additional fiscal burden could lead to theoretical gains, there is a risk that this imposition could lead to lower levels of economic activity and to companies passing the additional burden onto their suppliers or consumers.

In relation to introducing a windfall tax rate on energy companies, a number of factors would need to be considered. Firstly, there is the potential of higher prices for energy consumers who have only recently seen very welcome reductions from previous historic highs. The proposed windfall tax could also have a negative impact on employment levels in energy companies if cost-cutting measures are introduced in response. Finally, a windfall tax rate could reduce competition in a sector that has previously seen the departure of a number of energy providers.

The Deputy may be aware that, outside of corporation tax on energy company profits, there are a number of taxes already applied to energy products in Ireland, including the Mineral Oil Tax, carbon tax, electricity tax and VAT. There are also certain levies on some energy products and these are under the remit of the Minister for the Environment, Climate and Communications.

The Deputy may also be aware that, arising from an EU Regulation introduced in late 2022 to alleviate pressure then affecting energy consumers due to, among other factors the war in Ukraine, two revenue raising measures were introduced for years 2022 and 2023. Firstly, a Temporary Solidarity Contribution (TSC) was levied on Irish fossil fuel producers for years 2022 and 2023. Secondly, an electricity market price cap was placed at varying levels on the market revenues of electricity providers located here. Both of these measures are under the remit of the Minister for the Environment, Climate and Communications. However, it is worth noting that proceeds from these measures have been used to support final energy consumers, including households and businesses.

The types of windfall gains applied and the dates for which they applied, were set out within the EU Regulation (Council Regulation 2022/1854). These measures were not extended into the future as this action could send negative investment signals to investors in Ireland’s energy market.

Introducing a national measure, such as a windfall tax, on its own, without the protections in the Regulation, could risk increasing Ireland’s weighted average cost of capital (WACC) for energy projects. It may also send negative investment signals to investors in Ireland’s energy market at a time when the Government is committed to achieving Ireland’s electricity generation targets and all necessary actions to ensure and protect Ireland’s energy security.