Before he leaves office as prime minister, Boris Johnson has no intention of enacting a windfall tax on the profits of electrical companies, according to his spokesperson.
The government announced in May that oil and gas businesses would be subject to an extra 25% tax for the ensuing 12 months to assist households with growing costs.
However, according to the PM’s spokesperson, power producers wouldn’t be covered by such a regulation.
Following the news, shares of the energy companies Centrica and SSE both increased by 3%.
The government implemented the Energy Profits Levy, a new tax on energy corporations, in May in an effort to earn roughly £5 billion.
It happened after BP and Shell both announced significant profit gains as the price of oil and gas soared due to supply issues following Russia’s invasion of Ukraine, a key supplier of fossil fuels, and rises in demand brought on by the relaxation of Covid regulations globally.
It is intended that the windfall tax on UK oil and gas producers, a one-time levy levied by the government on a corporation, would be used to aid people whose budgets are being squeezed by growing energy costs.
The prime minister’s spokesperson, however, said when asked on Monday if the windfall tax will be extended to electricity generators, “We would not want to introduce any new policies or big economic choices. That is not anything that is planned.
The official said there were “no plans to introduce or expand that to that group,” adding that the government will “continue to examine the magnitude of the profits and take appropriate actions.”
The BBC has approached the Treasury for comment.
Labor has urged the government to “backdate” the Energy Profits Levy to January to collect “additional tax income” from oil and gas companies.
James Murray, a shadow minister for the Treasury, asserted that adding the additional months might generate an additional £1.9 billion. He asked the government to “invest toward abolishing VAT on residential energy bills for the remainder of this year.”
According to the most recent predictions, typical residential energy costs might rise to more than £3,300 yearly this winter after rising by £700 annually in April.
Next week, a series of government payments to assist with expenses will begin to be made. According to the government, all UK families will receive a £400 savings on their heating costs, and those receiving assistance will also receive an additional £650.
However, Mr. Murray of Labour claimed that because the home energy assistance program was “cobbled together” at the last minute, a total of £200 million in public funds will be allocated to families who own several houses.
“This is unfair. That is not a wise use of tax dollars, ” he added.
The Financial Times was the first to note that power generators, particularly those engaged in renewable energy, may be subject to a windfall tax.
Sources of the Treasury noted that nuclear and renewable energy generators have also made huge gains. As a result, power rates have risen as they examined ways to levy a windfall tax on such companies. In addition, due to their independence from costly gas for electricity production, they also reaped additional revenues.
However, energy companies cautioned that a move to include renewable energy in a windfall tax might undermine investor confidence ahead of crucial license auctions for the construction of new wind and solar projects.
The head of one of the largest renewable energy investors in the UK previously claimed that his profits from producing renewable energy were in the low hundreds of millions for the entire year, as opposed to Shell’s and BP’s earnings of £7 billion and £5 billion, respectively, in just the first three months of 2021.