Two Cabinet ministers on Saturday voiced their opposition to imposing a one-off windfall tax on the profit of oil and gas companies to help address the cost-of-living crisis.
Ministers have so far resisted the push from Labour and the Liberal Democrats to introduce the levy, which would add another 10 percent to the corporation tax on the companies’ profit on top of the 40 percent they have been paying, but have also refused to rule it out.
Addressing the Welsh Conservative conference on Saturday, Health Secretary Sajid Javid said he “instinctively” doesn’t like the idea and that the government has to be “really careful.”
“As a country, we have a very hard-won but strong reputation on being pro-business, welcoming investment.
“Businesses like certainty and of course there’s no such thing as pure certainty, but when it comes to taxes, I think we’ve just got to be really careful with these sudden taxes that could have an impact in the long term that we would come to regret,” he added.
In an interview with The Telegraph, Northern Ireland Secretary Brandon Lewis said the government can’t rule anything out, but the idea “doesn’t really work” and that the government is “very right to be wary of windfall taxes.”
“It puts off investment both in that sector and, absolutely, the risk in others,” he said. “So we'd be very, very wary of a windfall tax. What we want to see is companies using the money they’ve got to invest, particularly in that industry.”
He also accused Labour of favouring “a few headlines” over businesses, saying: “Dropping those kinds of things out there can scare off investment. That is damaging to the UK economy.”
Jacob Rees-Mogg, meanwhile, has also mounted opposition from within the Cabinet as he argued it is wrong to raid the “honey pot of business.”
The Brexit opportunities minister said the one-off measure on North Sea firms would ultimately see the public pay more tax.
But Labour leader Sir Keir Starmer argues a government U-turn on opposition to a windfall tax is “inevitable” as it would “raise billions of pounds, cutting energy bills across the country.”
The idea of a windfall tax has gained popularity because energy firms are seeing soaring profits owing to rising consumer prices, as fuelled by the pandemic and the war in Ukraine.
Labour has argued a windfall tax could fund a VAT cut on energy bills and an increase in the warm home discount for those on a low income.
Offshore Energies UK, the energy industry’s trade body, has said the tax would put investment and jobs at risk.
