MPs back call to tax energy companies
Energy companies may be forced to pay a one-off tax to help families in the UK meet the rising cost of heating their homes.
Millions of households have been hit with two rounds of price hikes since the start of the year, as the rising wholesale cost of oil forces energy firms to claw back their margins. However, they have also come under increasing criticism for rising prices while simultaneously posting huge jumps in profits. Energy companies' profits have risen nearly sixfold in three years.
Now politicians are increasingly hitting out at utility firms, with 75 Labour MPs publicly signing a petition of left-leaning pressure group Compass’ website for the government to introduce a one-off energy company tax.
The group wants to see revenue from the tax ring-fenced to help those struggling with rising fuel bills and to kick-start a national programme to ensure every home in the UK is properly insulated and energy efficient.
So far, the Prime Minister has refused to budge on the issue, although a one-off tax has not been ruled out.
There are concerns, however, that such a tax would hurt energy firms and would send a negative message to investors.
David Porter, chief executive of the Association of Electricity Producers, says: “The impact of higher energy bills is a problem, but, in today’s volatile political environment, we need to think more carefully about how we solve it. A windfall tax would be neither just, nor sensible. It would also send out a very negative signal to investors.”
And according to Oil and Gas UK, which represents the two industries, last year firms paid £8 million in taxes and this is expected to increase to £16 billion this year.
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An unexpected one-off financial gain in cash or shares, generally when mutual building societies convert to stock market-quoted banks. Also windfall tax, a one-off tax imposed by government. The UK government applied such a measure in the Budget of July 1997 on the profits of privatised utilities companies.