British Prime Minister Boris Johnson said on Wednesday he doesn’t like the idea of imposing a windfall tax on the profits of energy firms but stopped short of ruling one out.
The Conservative government has so far resisted Labour’s call to impose a one-off windfall tax on North Sea oil and gas producers, which would add another 10 percent to the corporation tax on the companies’ profit on top of the 40 percent they have been paying, to help fund cash support for households grappling with soaring bills.
Asked on Wednesday if he’s ruling out the idea, Johnson repeated the government’s argument that such taxes would deter investment.
“The disadvantage with those sorts of taxes is that they deter investment in the very things that we need to see them putting them out. They need to be investing in new technology, in new energy supply,” Johnson told LBC outside of Helsinki airport during his trip to Sweden and Finland to sign security pacts with the Scandinavian countries.
Challenged with the fact that BP’s CEO said a windfall tax won’t affect his company’s existing investment plan, Johnson said, “Well, then we'll have to look at it.”
Pressed twice again on whether he is ruling out the tax, the prime minister said: “I don’t like them, I don’t think they’re the right thing. I don’t think they’re the right way forward. I want those companies to make big, big investments.”
On May 4, BP’s CEO Bernard Looney told The Times of London the company wouldn’t cancel any part of its £18 billion ($22 billion) investment plan in the UK until 2030 on producing oil and gas, wind power, an electric car charging network, and other projects.
Looney said the company wouldn’t cancel these plans if it’s hit by a windfall tax, because it is “backing Britain.”
On Tuesday, Johnson told Parliament that the government would continue to help families with increased costs of living, but it plans to stimulate the UK’s economic growth to get through the crisis instead of spending its way out of it.
In his LBC interview, Johnson indicated there would be additional support over the summer rather than waiting for the Budget in the autumn.
“There is more coming down the track. July and so on,” he said.
“But what we will do is use all the ingenuity and compassion that we have and the fiscal firepower that we have as a result of the strong economic growth we had coming out of the pandemic.”
The prime minister said the UK’s “growth will return very strongly in the next couple of years.”
His comments follow the first meeting this week of the government’s cost-of-living committee, in which he instructed ministers to come forward with proposals to ease pressure on household budgets.
In a statement ahead of the Cabinet meeting, Downing Street said the government “will continue examining what more we can do to ease the pressures on hard-working people and families” over the “coming months.”
Households face soaring energy bills, inflation is forecast to hit 10 percent, and welfare payments and wages are falling far behind the increase in prices.
Downing Street said the prime minister will use Thursday’s away-day to “rally Cabinet ministers to deliver on the public’s priorities and bring the benefits of the Queen’s Speech to life.”
Separate from the Cabinet meeting, ministers are set to visit communities and businesses across the west of England, Midlands, and Wales.