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Chancellor looks at windfall tax on firms
Friday 1st August 2008, 11:49AM BST.
The Government confirmed today that it is considering a windfall tax on the multi-billion pound profits being made by the big fuel and energy companies.Business Secretary John Hutton said Chancellor Alistair Darling was looking at all the options following the outcry over what critics have described as the “grotesque” profits made by the companies on the back of soaring oil and gas prices.
BP and Shell have announced profits of more than £14 billion this week and yesterday Centrica weighed in with a profit of nearly £1 billion after announcing a staggering 35 per cent increase in gas bills.
Labour imposed a windfall tax on the utility companies in 1997 and now a similar move is being considered as Mr Darling tries to raise cash to help families hit by soaring food and fuel prices.
Mr Hutton is understood to oppose a one-off tax on the energy companies because he believes it would deter much-needed investment in the sector.
He said: “Tax policy is a matter for the Chancellor. We have got to weigh up some very important considerations.
“It’s a complicated set of issues and the Chancellor is looking at all of these options sensibly and correctly as he always does and he will come forward in due course with his proposals.”
Asked if there was a downside to a windfall tax, the Business Secretary replied: “We have got to encourage very significant investment into our power generation system over the next 10 to 15 years.
“We have got to have a fiscal and regulatory climate that encourages more of that investment because, quite simply, it will go elsewhere if there’s not confidence in the UK market.”
Mr Hutton said the Chancellor had to make some “very difficult calls”, but Labour MPs like Rob Marris (Wolverhampton South West) and junior minister Ivan Lewis have urged the Prime Minister and Chancellor to act.
By London Editor John Hipwood
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if this tax helps us by reducing council tax, tax on fuel and goods I will be happy however no doubt this windfall tax will be used to line the coffers at No 10, and given out in aid to foreign countries or spent on wars which we should not be fighting.
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It will be outrageous if companies are penalised for being too successful.
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harold, profiteering from price rises in oil and gas is not in my book being succesful, it is more commonly known as ripping off the public, and these companies need windfall taxes so that the government can use these taxes to assist the poor with relief from their huge fuel bills.
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its not a good idea – we need to build what 8000 wind turbines and 8 nuclear power plants just to power our homes – if we run out oil and need to power our cars too then double that again – sickening as it is – if we windfall tax these companies we will loose all this development and so prices will go up, co2 emissions will go up, flooding will increase, hosptial emissions from over heating, immigration from flooded parts of asia will increase, we will all be poorer, our insurance will go up, txes will have to go up etc… So sorry no tax, more investment in the fight against climate change please
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not a good plan for UK PLC
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What’s the point in taxing anything like this?
How is that going to make any difference?
We are at the mercy of large, mostly foreign owned energy supply companies, who will charge what they like.
It should never have been like this, the whole energy sector should be taxed 100%, that is: brought under public ownership.
Energy, like water, is a fundamental resource, and should not be left to the greed of private ownership.
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bad move for the future investment in nuclear etc to be scaring off investors
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hammer them I say, like they hammer us, take their profits and give them back to the people if you are truly Labour, I expect a cheque, that will restart the economy
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If these companies can show that their massive profits are genuinely being ploughed back into investment – for example more gas storage facilities so that we’re less susceptible to fluctuations in the market, then that part of their profit shouldn’t be taxed.
However the massive pay rises and bonuses paid to their executives should be stopped at once. Any company that needs to raise their prices by multiples of the rate of inflation cannot be regarded as successful.
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Whatever he taxes them they will just pass back to the customer, with the wages they pay in the public secotr being so low, all the best accountants go and work for firms like Centrica, so they will skillfully dodge it
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In that case Laura then the Government must compulsary purchase back our national energy and water companies and take them away from the fat cats
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it wont help, it will put the price of energy up further still as they look to recoup their losses
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What if these “multi-billion” pound profits represent 1/2 a percent return on the total investment by the company over 12 months? Half of one percent profit on turnover doesn’t sound unreasonable to me.
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would be the first good thing he’s done as chancellor, if nationalise northern rock for sake of overall economy, why not energy as it is so important to us all
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