How to increase taxes on fossil fuel profits

Overview

Taxing excess profits, both in the fossil fuel industry and the overall corporate sector, is essential to restructure the economy to tackle climate breakdown, reduce inequality and make rich polluters pay. This briefing paper sets out Oxfam’s proposal for two taxes: a Rich Polluter Profit Tax (RPPT) on fossil fuel corporations, and an Excess Profit Tax (EPT) across all other sectors. An RPPT will ensure renewables are always more profitable than fossil fuel investments, and an EPT will reduce market concentration and the concentration of wealth, reducing inequality. Both can be implemented through existing corporate tax systems. Together, they could raise over US $1 trillion in their first year, which could fund vital investments for people and the planet. The paper explains how governments can design, administer and coordinate these taxes nationally and globally, to fund a just, gender responsive climate transition and fairer public finance.