Rishi Sunak has stepped up his warnings to the UK oil and gas industry that if companies do not announce an increase in investment plans for the UK “soon”, they will face a potential income tax.
The British Chancellor is under pressure from his political opponents – and some prominent members of his own Conservative Party – to impose a one-off levy on energy groups whose profits have risen due to higher gas prices.
On Tuesday, Labor used the debate on a recent speech by the Queen forcing the Communes to vote on the introduction of an unexpected tax is a move by the opposition to underscore the government’s reluctance to impose it. The vote was lost 310 against 248.
Although this proposal was not supported by any Tory MPs, conservative benches are concerned that the government has not convinced the public that it is doing enough to fight cost of living crisis. According to a new YouGov poll, about 72 percent of Britons believe the government is doing poorly in the economy.
For months, Sunak has opposed the idea of a tax on windfall profits, arguing it could hold back investment in the North Sea at a time when the government wants to boost Britain’s energy security. However, in recent weeks, as companies shattered analysts ’earnings forecasts, the chancellor suffered shifted his tongue.
He has now made it clear that if companies like BP and Shell do not raise their investment targets for the UK beyond existing plans, he will inflict a levy on them. The funds raised can be used to alleviate the crisis with rising cost of living.
Ed Miliband, the shadow secretary for Labor energy, told the House of Commons that Sunak’s resistance to the levy made no sense, given that previous Tory governments had levied unexpected taxes. Conservative administration Margaret Thatcher raised taxes on the oil and gas sector in the 1980s, and in 1981 taxed banks with excess profits.
“No matter how great the crisis, no matter how great the excess profits, taxation should not change?” Miliband asked.
He also cited several prominent figures who supported the idea. Among them were Lord Hague, a former Conservative leader, Lord Brown, former BP CEO and John Alan, Tesco CEO.
“Ordinary left-handed suspects,” Miliband joked.
Sunak told deputies that he would approach the issue “pragmatically”. “We want to see energy companies who received extraordinary profits at a time of sharply rising prices, invest those profits back into British jobs. Growth and energy security, ”the chancellor said.
“But as I was clear, and as I have repeatedly said, if it does not happen quickly and on a significant scale, then no option will be ruled out.”
BP’s investment commitment fails to silence calls for UK income tax
The chancellor said it was “irresponsible” to assume he had not taken action to help people with rising cost of living as inflation rose sharply.
He told lawmakers that the government has reduced fuel tariffs by giving a municipal tax rebate of millions, lowering the reduced rate on universal credit and increasing the rebate on warm homes. “This government has always acted to protect this country in times of challenge,” Sunak said.
But he added that the reasons for the rise in prices are global and that “no honest chancellor” can tell the public that they will not grow further. “There are no measures that any government that you can take that can make these global forces disappear overnight.”
Electricity bills in the UK are expected to remain high despite proposals from the regulator Ofgem reconsider the restriction of energy prices in the country every three months, so that any reduction in wholesale prices can be passed on to consumers faster.
Energy consulting firm Cornwall Insight said Tuesday it expects the price limit to rise by more than £ 600 if it changes in October, to more than £ 2,600 a year per family on average.
Mel Stride, chairman of the Treasury’s selection committee, said Monday that he believes “there is a case” for the windfall tax.
Robert Halfon, chairman of the Electoral Committee on Education, said he would abstain on Tuesday. He said the government should consider imposing a profit tax, arguing that oil companies “do not pass [fuel duty] cuts to pumps, [and] it takes them many years to lower the price when the international price falls. ”
Meanwhile, Quasi Quarteng, a business secretary, wrote to gasoline retailers urging them to pass on to customers as soon as possible the recent reduction in fuel tariffs by 5 pence per liter.
Quarteng said in his letter that the government had asked the Office of Competition and Markets, the regulator, to make sure the industry was not “violating competition or consumer law.”
Following a vote in the House of Representatives, Jenny Stanning of Offshore Energies UK said the Treasury was projected to take £ 5 billion more from oil and gas companies than expected last October, due to high world prices and high tax rates.
“Offshore oil and gas companies are already taxed at 40%, which is twice as much as in other parts of the UK,” she said.
“An unexpected tax risks damaging investment, which will lead to lower energy production at home, falling investment in green energy and a major blow to jobs.”
Additional report by Natalie Thomas