The UFC-Que Choisir calls on parliamentarians to vote for the establishment of an exceptional tax of 5 billion euros on the profits of the oil group Total.
The Total group will achieve this year more than 13 billion euros in net income against an annual average of 5 to 6 billion. The constitution of these exceptional profits comes from an economic model, to say the least, unique: the oil groups align their upstream and downstream margins to the level of the crude barrel price. Consequently, the surge in oil automatically leads to an explosion in the profits of oil groups.
The UFC-Que Choisir calculated that, relative to a normal profitability of 15%, Total's surplus profits reached 4 billion euros in 2004 and 7 billion in 2005. It also appears that the capital employed for the activity of Total have declined slightly over the past two years, which reinforces the artificial nature of these surplus profits. The lack of competition in the sector therefore allows the oil group to build up a historical rent to the detriment of the purchasing power of consumers.
The UFC-Que Choisir asks that, on the occasion of the next corrective finance law, parliamentarians follow the example of Great Britain, which has just doubled the taxation of oil profits from the North Sea. The British Minister of Finance very simply justified this measure by estimating "that the balance must be rebalanced between consumers who pay for gasoline or heating and [oil] producers". This levy will also encourage oil groups to revise their pricing policy downwards by calculating their profits on rational and objective bases, such as productivity and the level of investments.
The UFC-Que Choisir is proposing two measures to ensure that this exceptional tax is redistributed for the benefit of consumers and the promotion of sustainable development:
- a structural measure to reduce dependence on oil: 3,7 billion euros must be devoted to investment in the local public transport network which could then grow by 25% per year for five years. The objective of this measure is to increase the frequency of services and the density of the network so that the journey time of public transport is no longer systematically longer than that of car travel.
- a measure for purchasing power: granting one month of free local public transport throughout France in order to cushion the impact of the increase in gasoline borne by consumers in 2005.
source: What to choose
Note from Rulian: The UFC has it all: taxing the “extra profits” of oil and reinvesting everything in public transport. Well done.