UK government threatens energy companies with windfall tax

The UK chancellor, Rishi Sunak, has threatened to hit energy companies with a one-off “windfall” tax if they don’t invest enough in new projects.

 

Mr Sunak added that he wanted to see investment “soon” to boost energy security, and “no options are off the table” if not.

 

Opposition parties want to tax oil and gas firms’ soaring profits to help households grappling with rising bills.

 

Treasury officials have been ordered to examine a potential tax, a source said.

 

Mr Sunak said he was not “naturally attracted” to the idea of a windfall tax, but he was “pragmatic” about introducing one.

 

UK Prime Minister, Boris Johnson, said the government would “have to look” at the proposal if not enough investment was made.

 

And Business Secretary Kwasi Kwarteng said that, although he felt taxes were “a disincentive to investment”, given the “unprecedented situation” in Ukraine and rising prices, “nothing should be taken off the table”.

 

Energy firms have been posting huge profits this year, amid soaring prices for gas and oil as economies restart after Covid lockdowns.

 

Labour, the Lib Dems and the SNP are all calling for a windfall tax on their profits to pay for tax cuts and benefit boosts, to help households cope with rising living costs caused by spiralling inflation.

 

The government has argued such a tax could deter the investment it wants to see in new energy infrastructure, but has not ruled one out.

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