LONDON (Parliament Politics Magazine) – If energy corporations do not invest sufficiently in new projects, the chancellor has threatened to levy a one-time “windfall” tax.
Rishi Sunak went on to say that he hopes to see investment “soon” to improve energy security, and that if that doesn’t happen, no options are off the table.
Opposition parties seek to tax oil and gas companies’ growing profits in order to assist families cope with rising costs.
According to a source, Treasury officials have been directed to study a prospective tax.
Mr Sunak told the BBC that while he was not naturally drawn to the idea of a windfall tax, he was “pragmatic” about enacting one.
Prime Minister Boris Johnson told LBC radio that the proposal would have to be looked at by the government if not enough money was invested.
And, despite his belief that taxes are “a deterrent to investment,” Business Secretary Kwasi Kwarteng told the BBC that, given the unique scenario in Ukraine and soaring prices, “nothing should be taken off the table.”
Energy companies have made big profits this year, despite rising gas and oil prices as economies recover from Covid lockdowns.
‘A significant amount’
To help families cope with soaring living costs caused by spiralling inflation, Labour, the Lib Dems, and the SNP are all advocating for a windfall tax on their earnings to pay for tax cuts and benefit increases.
The administration has argued that such a levy would discourage investment in new energy infrastructure, but has not ruled it out entirely.
Ed Miliband, Labour’s shadow climate change secretary, said the Tories have blocked a windfall tax at every point.
Now that their reasons were wearing thin, they heard they were thinking about it. But how much longer did this government have to decide before the British people suffered?, he added.
The truth was that the Conservatives were relying on Labour’s ideas because they were unable to address the rising cost of living crisis.
When asked about the possibility of windfall taxes by BBC economics editor Faisal Islam, Mr Sunak said that he wasn’t naturally attracted to the idea of them.
But what he did know was that these businesses were currently profiting handsomely as a result of the current high prices.
What he would want to see was considerable investment back into the UK economy to support jobs and energy security, and he would like to see it happen quickly.
And if that didn’t happen, then there were no other options, he added.
On Thursday, Downing Street told reporters that there was more to go on investment, but did not specify when it expected to see this.