Ireland is contemplating levying a windfall energy tax in the 2023 budget next month given “significant profits” made by companies in the sector, prime minister Micheál Martin said.

“The government will consider a range of issues and will give examination to the issue of a windfall tax,” he told reporters on Thursday, adding that companies in the energy sector are earning “significant profits.”

Compared to other EU nations, Ireland is less affected by the energy crisis that arose from Russia’s invasion of Ukraine since it does not receive piped gas from the European continent. As such, it recently secured an opt-out from a bloc-wide drive to reduce energy use. 

But inflation is running at 9.1 per cent, a near 40-year high, and the Irish government has already brought forward the budget to speed up delivery of cost-of-living relief.

This week, the government reported a €5bn exchequer surplus at the end of July and a 23.5 per cent increase in tax revenue to €8.3bn, driven by strong growth in corporate tax, income tax and VAT. That has provided Ireland with a buffer whereas other EU countries, like Spain, have proposed temporary windfall taxes on banks as well as energy companies.

Martin said that the energy crisis caused by the Ukraine war meant that liquefied natural gas “simply has to be considered” in Ireland. A proposed Shannon LNG project has received stiff opposition from the Green Party, one of the members of the ruling coalition.

“All of Europe is looking at LNG,” Martin said. “LNG that uses fuel that is not derived from fracking is consistent with the Programme for Government,” he added, referring to the coalition’s policy blueprint.