UK hikes windfall tax on energy firms’ profits
The British government was increasing the windfall tax on the profits of oil and natural gas companies in an emergency budget announced Thursday that was aimed at restoring the nation's economic credibility and patching up its battered finances.
He told MPS on Thursday: “In the face of unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future.
“So today we deliver a plan to tackle the cost-of-living crisis and rebuild our economy.”
One way is through the windfall tax, which will rise from 25 per cent to 35 per cent from January 2024 to March 2028. Electricity generators also will have to pay a new temporary levy of 45 per cent .
Hunt said the taxes combined would raise £14 billion next year. Energy companies such as Londonbased BP and Shell have reported huge profits in recent months as Russia's war in Ukraine pushes up energy prices worldwide.
Britain's government has faced pressure to increase taxes on oil and gas companies to help fund support for millions of Britons struggling to cope with soaring energy prices.
Prime Minister Rishi Sunak, a former Treasury chief, introduced a 25 per cent energy profits levy earlier this year but that was limited to profits made from extracting UK oil and gas. Just three weeks after taking office, Sunak's government faces the challenge of balancing the nation's budget while helping millions of people slammed by a cost-of-living crisis as Russia's war in Ukraine pushes up energy prices and slows economic growth. “Today's statement will help deliver the long-term stability this country needs,” Sunak promised in a promotional video released ahead of the statement.
The emergency budget statement aims to restore the government's financial and political credibility after former Prime Minister Liz Truss announced £45 billion in unfunded tax cuts that torpedoed investor confidence, sent the pound to record lows against the US dollar and sparked emergency central bank intervention. Truss was forced to resign six weeks after taking office.
The government will struggle to meet all of the competing demands, said Torsten Bell, chief executive of the Resolution Foundation, a think tank that seeks to improve the living standards of low- and middleincome people.
“The uncomfortable reality is that unless global energy price rises reverse, we will remain poorer as a country than we'd hoped to be,” Bell wrote this week. “The world is as it is, not as we would like it to be, but the question is how well we wrestle with that reality.”
That means grappling with the demands of nurses, police officers, border guards and civil servants who are all clamouring for pay increases after inflation accelerated to a 41-year high of 11.1 per cent in October. Welfare recipients and pensioners also are looking for higher payments, and low-income families are calling for an expansion of the free school lunch programme.
But resources are limited, with Sunak facing a budget shortfall of at least £40 billion.
UK public debt ballooned to almost 83 per cent of economic output in 2017 from less than 36 per cent in 2007. — ap
In the face of unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future.
Jeremy Hunt
UK’S Chancellor of the Exchequer