Barry White
On 21 June the Government launched a little publicised consultation into a new windfall tax, which only runs for 7 days, closing on 28 June (see: https://www.gov.uk/government/consultations/draft-legislation-energy-oil-and-gas-profits-levy-bill). The windfall tax on oil and gas companies, who’ve made massive profits as our energy bills have soared (see: https://www.theguardian.com/business/2022/feb/05/40bn-profits-for-bp-and-shell-fuel-calls-for-windfall-tax-on-energy-firms), only happened because of public and political pressure.
Remember how earlier this year the government kept saying a windfall tax was a bad idea. Then towards the end of May came the about turn, and a windfall tax was announced as part of their £15bn ‘cost of living package’.
However, all is not as it seems. Some (but by no means all) media outlets have pointed to the new subsidy for oil and gas companies which form part of the tax. Never mind the commitments made at COP26 to reduce the UK’s dependence on fossil fuels, the Chancellor’s windfall tax announced last month offers them millions of pounds in tax cuts if they actually increase their extraction of fossil fuel in the UK (see: https://www.theguardian.com/business/2022/may/29/loophole-could-let-north-sea-oil-and-gas-giants-slash-uk-windfall-tax-bill). It gives companies 91p in tax breaks for every £1 they invest in extracting fossil fuels thus undermining the COP26 commitments and putting the climate at greater risk.
Research carried out with the New Economics Foundation, found that the government handed firms operating in British waters tax breaks worth about £3.1bn in 2019-20 and £2.5bn in 2020. Most of the funds were directed to shareholders in share buy-back schemes, the think-tank reported.
Professor Sir David King, who served as the Government’s Chief Scientific Advisor, as well as the UK’s permanent Special Representative for Climate Change between 2013 and 2017, said that the announcement betrayed the UK’s former commitments.
“In contrast with the UK’s commitment over many years, confirmed in Glasgow last year, the Chancellor is now announcing a further subsidy to the oil and gas industry to extract more oil and gas from the North Sea”, he said. “This decision reverses the ambition to turn the oil and gas companies to renewable energy and is disastrous for the necessary transition towards a manageable future for humanity.”
Sir David King described chancellor Sunak’s new subsidy as “just about the most absurd announcement” (https://bylinetimes.com/2022/05/27/rishi-sunak-subsidy-fossil-fuel-sir-david-king-interview-climate-change/)
Meanwhile with only days left to comment on the government’s proposed new windfall tax, now is the time to tell them to make the tax permanent, scrap the new tax breaks (the investment allowance) announced in May and put more money into household insulation and energy efficiency measures.
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