The lower house of the Czech parliament approved a 60% tax on the excess profits of energy companies and big banks on Friday, supporting the government’s plans in Prague to use the money to finance billions of euros in economic relief measures. impact of rising energy prices, Reuters reports.

The executive expects to receive about 85 billion Czech crowns ($3.40 billion), or about 1.2 percent of GDP, from the tax in 2023 and a smaller level in 2024 and 2025. The tax will be applied to profits exceeding 120% of the average level recorded in the period 2018 – 2021, and will be applied in addition to the 19% income tax.

The tax will apply from 2023, for three years, but the legislation must also be approved by the Senate.

Other EU member states have also announced tax on excess profits of companies in the oil and natural gas sector as part of emergency measures to help consumers.

The government in Prague wants to tax the excessive profits of energy companies such as state-owned CEZ and banks, whose profits have soared since the Czech Central Bank raised interest rates to fight inflation. In addition to CEZ, the ORLEN Unipetrol refinery and six of the country’s largest banks will be affected: CSOB, Ceska Sporitelna, Komercni Banka, UniCredit, Raiffeisenbank and MONETA.

The proceeds will go towards funding government measures such as capping electricity prices for households and small businesses, as well as supporting industry, which is also suffering from rising energy prices. (Source: Agerpres)