In a move that has caused controversy, the UK government has raised the levy on extraordinary profits of oil and gas companies from 25 percent to 35 percent in order to fund energy bill support measures.
While some have applauded the move, others have argued that it will harm the UK economy, with one Conservative MP warning that it could result in “more oil imports, less UK tax revenue, fewer well paid UK jobs and less growth.”
The MP, John Redwood, believes that oil companies are cutting back on investments in the North Sea as a result of the tax increase.
The tax comes as energy giants enjoy historically high profits due to surging wholesale gas costs triggered by Russia’s war in Ukraine.
However, these surging energy costs are also causing millions of Britons to suffer from fuel poverty. The energy price guarantee is one of the measures the government has taken to shield households from the full impact of the high costs, capping bills for households with typical energy use at £2,500.
While the windfall tax is expected to raise up to £40 billion over the next six years, critics have argued that it is a dangerous measure.
The Offshore Energies UK trade body, representing the oil and gas industry, warns that multinationals like BP and Shell are groups with multiple overseas subsidiaries, and that most of their profits are made abroad.
The spokesperson argues that subsidiaries based in other countries will pay taxes in those countries, and that the UK cannot impose a second tax just because the group has its headquarters in the UK. They also argue that it would be wrong for the UK to tax profits made in other countries.
While Shell has announced record 2022 profits of £33.1 billion, which could pay this year’s energy bills for nearly half (13.2 million) of all UK households, some campaigners have criticized the company’s profits, arguing that they come at a time when millions of families are struggling to pay their energy bills.
Jonathan Noronha-Gant, a Senior Campaigner from the NGO Global Witness, argued that if oil and gas companies were properly taxed, and if the government stopped handing them billions of pounds in tax breaks and other subsidies, then that money could be used to provide long-term support for Brits struggling to pay their energy bills and to give key workers the financial recognition they deserve.
story above derived from this News Link-> Windfall tax risks ‘more oil imports, less revenue and fewer well paid jobs’, MP claims