UK Labor sees £17bn hole in Sunak windfall energy tax

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(Bloomberg) – Britain’s Rishi Sunak government could raise a further £16.8 billion ($20.2 billion) from its windfall tax on energy companies if ministers close loopholes in the tax and enforce it over a longer period, the opposition Labor Party said.

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Sunak announced the 25% tax on oil and gas company profits in May while still Chancellor of the Exchequer, and as prime minister he raised the rate to 35% in the statement. fall of this month.

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But the Labor Party – which advocated the policy before the Conservative government passed it – said on Tuesday the government could reap billions in extra tax revenue by backdating the levy to January, scrapping tax breaks introduced by Sunak for companies that invest in the extraction of oil in the North. Wed, and increasing the rate.

« Labour would make fairer choices – taxing windfall profits from war fairly, instead of dipping into workers’ pockets first, » Shadow Chancellor Rachel Reeves said in a statement.

The opposition party argues that Sunak’s tax breaks allow energy giants to lower their tax bills at a time when profits are inflated due to Russia’s war in Ukraine. Shell Plc, for example, has paid no windfall tax despite posting record global profits this year.

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Labor has estimated that scrapping investment allowances would bring in an additional £10.6billion over the life of the tax which is due to expire in 2028. The government, for its part, says the incentives are key to bolstering UK energy security and ending dependence on imported gas. and coal.

The Opposition said backdating the tax to the start of the year would bring in a further £2.6billion, while raising it to 38% to match the total tax on energy companies to that of Norway , would bring in £3.6 billion.

As it stands, the government’s tax adviser, the Office for Budget Responsibility, estimates the Windfall Profits Levy – officially called the Energy Profits Levy – will bring in £7.2 billion this year and £10.8 billion. billion pounds in the 2023-24 fiscal year.