Sarkozy Calls For Global Windfall Profits Tax

by Ulrika Lomas, Tax-News.com, Brussels

14 February 2008

French President Nicolas Sarkozy has reportedly asked the head of the International Monetary Fund (IMF) to study the feasibility of a global windfall tax on the profits of oil companies.

Finance Minister, Christine Lagarde told cable television channel LCI on Wednesday that Sarkozy had asked the new IMF chief, Dominique Strauss-Kahn, a fellow Frenchman, to consider a tax that would affect oil companies worldwide.

The President's request comes after some of the world's largest oil companies announced record-breaking profits after a year of record-high oil prices. Total, the largest French company by market value, and the world's fourth largest oil firm, reported on Wednesday that net profits for the fourth quarter of 2007 were up by 62% to EUR3.6 billion (USD5.23 billion).

Royal Dutch Shell, Europe's largest oil company, saw profits rise by a similar margin in the fourth quarter, to USD8.47 billion, while earlier in the month, Exxon Mobil announced an annual profit of USD40.6 billion - the largest ever in US corporate history.

During last year's election campaign, Sarkozy rejected a proposal for a French windfall tax by his socialist rival, Segolene Royal, arguing that companies like Total will simply repatriate profits elsewhere. However, according to Lagarde, Sarkozy wants "to think on a global level about a kind of tax that would allow those countries that have the least energy to benefit from these exceptional earnings".

"If we go in that direction it has to be at global level. We can't penalise just Total to the benefit of other big oil groups who would not be subject to this constraint," Lagarde added.

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