Windfall tax not off the table despite opposition
THE Government has not ruled out imposing a windfall tax on energy companies despite strong opposition from several ministers.
Education Secretary Nadhim Zahawi has said the Cabinet is considering “all the options” to combat the cost-of-living crisis, including a one-off levy on firms which have benefited from globally high gas and oil prices.
Chancellor Rishi Sunak has not ruled out imposing a windfall tax on energy producers, but ministers including Anne-Marie Trevelyan, Brandon Lewis, Sajid Javid and Jacob Rees-Mogg have criticised the measure as ineffective.
When asked about imposing a windfall tax by Sky’s Sophy Ridge yesterday, Mr Zahawi said: “We will look at all the options.
“I with the Chancellor, Prime Minister and Cabinet will look at every option.”
But he spoke about the impact this could have on elderly people, adding: “If you apply a windfall tax, [companies] will probably have to reduce or take away their dividend.
“Who receives the dividend? Pensioners through their pension funds.
“Investment has to be real, which is what I think Rishi [Sunak] will demand of all these companies and to see a roadmap towards that investment. We’re not taking any options off the table.”
International Trade Secretary AnneMarie Trevelyan said the Government is encouraging energy producers to invest their profits in green alternatives rather than imposing the tax.
She told Times Radio: “As the Chancellor said, it’s really important that he’s able to keep everything under review.”
Ms Trevelyan described a windfall tax as a “very short-term measure”, adding: “I don’t think a windfall tax is the most efficient way to do anything, I don’t think it drives forward at a pace.”
Meanwhile, Michael Lewis, chief executive of E.ON UK, has called on the Government to “tax those with the broadest shoulders”.
He told BBC One’s Sunday Morning TV show that approximately one million of E. ON’s eight million UK accounts are already in arrears, and this is expected to rise by 50% come October.
Mr Lewis said increasing Universal Credit payments and imposing a “social tariff” on energy companies would ease the cost of bills for those struggling to pay them.
Responding to E.ON’s projection for the number of people expected to be in arrears by October, shadow chancellor Rachel Reeves renewed Labour’s calls for the Government to urgently impose a windfall tax.
She said: “These comments underline how tough the cost-of-living crisis is for families, and how Conservative delays will see the situation get even worse.
“The Government must act now, by bringing in a windfall tax on oil and gas producer profits to cut bills.”
Jesse Norman, a Conservative former minister, said he supports a “temporary and well-defined” windfall tax which would be “equitable” for consumers, and believes former prime minister Margaret Thatcher would have imposed it if she were in charge.
He said on Twitter: “As several present and former oil and gas CEOs have noted, it won’t much change companies’ investment plans or the incentive to invest.”