On Tuesday, Conservative MPs will be told to vote against a windfall tax on oil and gas companies, according to the Business Secretary, who also criticized the Treasury’s plan.
The windfall tax, according to Kwasi Kwarteng, is a “bad idea” that would undermine the government’s efforts to generate more employment by discouraging investment from such companies.
Other members of the conservative party seem a little more up in the air with the decision.
Chancellor Rishi Sunak told the BBC that while he is “not naturally drawn” to the concept, “no option is off the table.”
Meanwhile, Prime Minister Boris Johnson told LBC Radio that “we’ll have to look at it,” before adding that “I don’t believe (windfall taxes) are the correct way forward.
A windfall tax is a one-time tax levied by the government on a business or group of businesses.
The aim is to target businesses that were fortunate enough to gain from something they were not responsible for – a windfall, which high energy costs are one example of.
Companies that extract oil and gas are making considerably more money than they were last year, partly because demand has surged as the globe recovers from the epidemic, and partly owing to supply concerns caused by Russia’s invasion of Ukraine.
This comes as BP’s underlying earnings more than doubled in the first quarter to $6.2 billion (£4.9 billion), while Shell’s profit almost tripled to $9.13 billion (£7.3 billion), its highest quarterly profit ever.
Labour however are taking a different stance, calling for the government to introduce this type of tax, citing it is shameful not to introduce the measure to help tackle the rising cost of living.
Ed Milliband has been leading the charge in speaking out in favour of this tax, Speaking to Sky’s Sophy Ridge he said: “We face a social emergency in this country. Seven million people, we know, are skipping meals because they can’t afford their bills and energy bills are rocketing upwards.”
“Of course, the right thing to do is to levy a windfall tax on those oil and gas companies so we can provide proper help to families. £200 across the board, cut in bills for all families, £600 for nine million families who are facing the biggest struggles, and that is absolutely essential.”
Despite his usual opposition, Conservative Treasury Committee head Mel Stride said there was a justification for considering “a one-off windfall tax” under the current “extraordinary circumstances.”
He said that the firms had generated high profits and that part of the money should be “channeled to those who are really struggling”.
This comes as Energy Bills are at an all-time high for households across the UK, with the energy price cap being raised at an average of almost £600 annually. This is all due to rising wholesale gas prices, impacting families across the world.
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