Wednesday, 6 Jul 2022

Boris Johnson u-turn? Prime Minister’s subtle windfall tax hint in PMQs

PMQs: Boris Johnson slams Starmer's 'lust to raise taxes'

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Sir Keir Starmer accused Prime Minister Boris Johnson of “choosing to let people struggle” as he delays a decision on whether to impose a levy on suppliers that have made huge profits from the cost of living crisis. Mr Johnson said the UK and the world faced problems in the cost of energy, “driven partly by Covid and partly by Putin’s war of choice in Ukraine”.

He added: “We always knew that there will be a short-term cost in weaning ourselves off Putin’s hydrocarbons, and in sanctioning the Russian economy.”

The Prime Minister said: “Not sticking the course would ultimately be that far greater economic risk”.

But, he failed to rule out a windfall tax, hinting that he could change his mind in the future.

He added: “We will look at measures, we will look at all the measures that we need to take, to get people through to the other side. But the only reason we can do that is because we took the tough decisions that were necessary during the pandemic, which would not have been possible if we listened to him.”

Sir Keir Starmer told the Prime Minister today that a windfall tax on oil companies was inevitable.

Sir Keir said in response to Mr Johnson: “Whilst he dithers, British households are slapped with an extra £53 million on their energy bills every single day.

“Meanwhile every single day North Sea oil and gas giants rake in £32 million in unexpected profits.

“Doesn’t he see that every single day he delays his inevitable U-turn, he’s going to do it, he’s choosing to let people struggle when they don’t need to?

“Doesn’t the Prime Minister realise that working people across the country can’t afford to wait while he vacillates? It’s time to make his mind up.”

However, Mr Johnson accused the opposition of “always” looking for ways to raise tax on businesses.

Labour has called for a windfall tax on energy companies since the announcement that bills would rise by hundreds of pounds in February.

Labour has said the money from a windfall tax should be used to help Brits pay their bills as the cost of living crisis deepens.

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What is a windfall tax?

A windfall tax is a one-off tax imposed by a Government on a company or group of companies.

Windfall taxes are used when said company is lucky enough to benefit from something they were not responsible for.

Energy companies have profited immensely from the ongoing crisis, which has seen household bills rise by hundreds of pounds a year since the new energy price cap was adjusted in April.

Will the Government u-turn on taxing energy companies?

Chancellor Rishi Sunak has said he is not “naturally attracted” to the concept of a windfall tax, but wanted to be “pragmatic” about introducing one.

At this stage, both the Chancellor and Prime Minister have gone from ruling out a windfall tax to softening on the idea, as millions suffer from unaffordable bills.

Mr Sunak said: “What I want to see is significant investment back into the UK economy to support jobs, to support energy security, and I want to see that investment soon.

“And if that doesn’t happen, then no options are off the table.”

Other countries have already announced a windfall tax on energy suppliers, such as Spain and Italy.

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