Welcome to the 1970’s. It is called redistribution of wealth. Coming to our town soon.
Jimmy Carter did this too; same name, same product even: Windfall Profits Tax (1980) on oil.
The price of the commodity goes up, so the selling price goes up too. If the selling price goes up “too much”, there are criminal statutes re price-gouging.
And of course there will be funds for “domestic energy services” which simply means shuffling the money about.
UK Slaps Energy Companies With New 25% Tax
The Prime Minister has said that a windfall tax on energy companies would discourage them to invest in infrastructure that may keep fuel costs low in the future.
Here we go: I will start with the bottom line.
Offshore Energies UK, which represents the offshore oil and gas industry, said the tax would burden firms with “sudden new costs,” which would “disrupt planning and investment and, above all, undermine investor confidence.”
The UK government has announced a temporary windfall tax on oil and gas giants to fund a relief package for households struggling with rising bills.
Millions of households will receive a £400 ($504) discount off their energy bills.
Around 8 million of the lowest income households will be sent a one-off payment of £650, and pensioners will receive a one-off £300 payment.
To help fund the package, which will cost £15 billion ($19 billion), the government will introduce a 25 percent profit levy on oil and gas giants, which it expects to generate £5 billion ($6.3 billion) in tax revenues.
Addressing the House of Commons on May 26, Sunak acknowledged that high inflation is causing “acute distress” for people in the country, telling MPs, “I know they are worried, I know people are struggling.”
He said the government “will not sit idly by while there is a risk that some in our country might be set so far back they might never recover.”
Sunak said the oil and gas sector is making “extraordinary profits” not as the result of innovation or efficiency, but as the result of “surging global commodity prices driven in part by Russia’s war.”
“For that reason I am sympathetic to the argument to tax those profits fairly,” he said.
Meanwhile, the chancellor said he is introducing a “new investment allowance” to incentivise energy firms to reinvest their profits in developing domestic energy sources.
Sunak stopped short of also slapping the new levy on electricity generators, although he said the Treasury was evaluating the scale of the profits being made in the industry and what steps could be taken.
The best of the swamp today.