Infotech Faced with inflation, London taxes the oil giants

Faced with inflation, London taxes the oil giants

After refusing to do so for weeks, London resolved on Thursday, May 26 to introduce a tax on the profits of the oil giants to finance billions of pounds of aid in the face of the soaring cost of living.

One in five Britons say they can no longer make ends meet, according to a Yougov poll released Thursday. Soaring food and energy prices, aggravated since the beginning of the Russian invasion of Ukraine, are expected to get even worse in October when the cap on energy prices will be raised sharply in the United Kingdom.

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Bruno Le Maire calls on companies that can to increase wages, cautious bosses

Finance Minister Rishi Sunak unveiled in Parliament on Thursday a 15 billion pound aid package for the most disadvantaged households, in the face of inflation at its highest in 40 years, at 9% over one year in April.

According to a statement from the British Treasury, “nearly one in eight of the UK’s most vulnerable households will receive at least £1,200 this year, including a one-off £650 cost of living payment, a minimum income (Universal Credit) increase of 400 pounds and a doubling of the reduction on energy bills ».

In total, with the measures valued at 22 billion pounds already announced, the total aid for “the cost of living for low-income households reaches 37 billion pounds this year”notes the Treasury.

temporary tax

These measures will be financed in particular by a tax “temporary 25% cut on energy profits for oil and gas companies, reflecting their extraordinary profits” since the start of the war in Ukraine.

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It should make it possible to raise 5 billion pounds, according to the Treasury, which specifies however that it could be largely reduced thanks to a “great discount” if the targeted energy giants invest in new energy sources. “Companies will overall receive 91 pence (tax credit) for every pound invested”details the Treasury.

Purchasing power, subject of the “first bill examined”, assures Elisabeth Borne

The exceptional tax does not currently apply to energy companies, contrary to certain press reports of the last few days, but the government “is in consultation with the sector (…) and will urgently assess the extent of (their) extraordinary benefits to take appropriate measures”.

The Labor opposition on Thursday quipped about this apparent about-face, after several months of persistent refusal by the Conservative government of Boris Johnson to tax the “majors” oil companies for fear of discouraging investment in the transition to carbon neutrality and energy security, echoing the arguments of the sector.

“Politics in crumbs”

” It was time “said Sam Nadel, director of government relations at Oxfam, an NGO fighting against poverty.

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However, he added, “The energy price crisis is a grim reminder of our over-reliance on fossil fuels. We should strengthen our energy security by investing in our abundant renewable resources which are affordable, secure and clean forms of energy”.

For the environmental NGO Greenpeace, the tax on the profits of the hydrocarbon giants is insufficient and should have reached 70%, which would have allowed “not only short-term support but also home improvements to ensure they use and waste less energy, and keep bills lower for years to come”.

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CMC Markets analyst Michael Hewson laments “a crumbling energy policy that changes direction more often than the wind”.

If the government now calls on the oil and gas sector for investment “to support the UK economy, jobs and energy security”he notes, “this was not the case a year ago, otherwise the investments in the (oil projects of) Cambo and Jackdaw (in the North Sea) would have already been approved”.

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