IMF Notes
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2022
August 30, 2022
Taxing Windfall Profits in the Energy Sector
Description: The surge in fossil fuel prices in 2022 has generated substantial windfall profits in the energy sector. Policymakers in many countries are exploring policies to tax part of these profits. Excess profits can be taxed by tax instruments targeted at economic rents that avoid discouraging investment and limit any impact on further price increases. Many fossil fuel producing countries already have an adequate rent-capturing fiscal instrument in place. Others may consider introducing a permanent tax on windfall profits from fossil fuel extraction but should be more cautious about temporary and possibly poorly designed windfall profit taxes. Given the importance of encouraging decarbonatization of energy generation, it seems counter-intuitive to introduce exceptional tax measures on renewable electricity generation.
June 7, 2022
Fiscal Policy for Mitigating the Social Impact of High Energy and Food Prices
Description: Fiscal policy has a crucial role in lessening the impact on the most vulnerable households. Governments must balance by ensuring access to energy and food, normalizing fiscal policy after unprecedented support in 2020, and promoting green transformation.
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