By Peter McLaren-Kennedy • 28 October 2022 • 9:25
According to reports on Friday, October 28 Sunak is said to be considering a range of options that includes expanding the windfall tax on energy companies. The news comes the day after Shell once again announces record profits for the quarter, more than double its profits for the same period last year.
Bizarrely the company paid no tax in the UK last year after it took advantage of a government scheme that allows it to defer tax if it invests in new drilling schemes – part of normal business activities.
Sources suggest that Sunak and the Chancellor Jeremy Hunt are in agreement that there is a massive fiscal hole that needs plugging. They are apparently also in agreement that spending cuts will be needed, but that at the same time additional investment is needed in some services.
A spokesperson for the prime minister told the The Telegraph that: “No options are off the table given the economic circumstances.”
No options off the table means that banks could also be targeted either through a windfall tax or a change in the tax regime.
The existing windfall tax for energy companies will raise around £17 billion in 2022 and 2023, however, it is due to end in December. Currently levied at 25 per cent, one of the options being considered is an increase in that rate.
Other options being considered are the inclusion of renewable energy generators in the windfall tax plans. It could also see the energy price cap being replaced by the windfall tax.
The Chief Executive of Shell Ben van Beurden, has acknowledged the case for windfall taxes but said that producers should be “at the table” to make sure any new taxes were designed in a “correct and appropriate” way.
Tory Chair Nadhim Zahawi told LBC Radio: “The prime minister, when chancellor, was actually the chancellor who introduced the windfall tax which is raising £5 billion from the energy producers like Shell.
“It also is incentivising them; this is why Rishi Sunak was so smart about this when he was chancellor, that if they make an investment in the UK… then of course they will be incentivised to do so.
“But these are tough decisions and I know the Chancellor and the Prime Minister will be looking at everything.”
He also added the news everyone wants to hear, that the state pension triple lock will be kept in place after No 10 refused to commit to the pledge. He said: “Pensioners are uniquely – and I’m going to state the bleeding obvious here – they’re unique in that they can’t take on work to increase their income and therefore are uniquely vulnerable.
“And I know that the Prime Minister and the Chancellor will be very, very conscious of that fact.”
A Treasury source reacting to suggestions that there is a black hole of around £35 billion, said: “Markets have calmed somewhat, but the picture is still grim. There is a massive fiscal black hole to fill.
“People should not underestimate the scale of this challenge, or how tough the decisions will have to be. We’ve seen what happens when governments ignore this reality.”
Rishi Sunak is trusted by a good percentage of the population to manage the economy, implementing a new or broader windfall tax will add to that trust with the move highly popular amongst the electorate incensed with the high profits within the energy sector.
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Originally from South Africa, Peter is based on the Costa Blanca and is a web reporter for the Euro Weekly News covering international and Spanish national news.
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unclear what all countries are going to do to balance the books in the future when they cannot get a quick fix when taxes dwindles as fossil fuels run out?!
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