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As the invasion of Ukraine continues, the West must tax the windfall of war profiteers.Philip Inman

are fighting a war Europe We need to put our economies on war mode or accept that Western government support is waning and we are dragged along by a decline in public tolerance.

The message comes from several economists who fear that a laissez-faire approach to energy and food prices may fall into the hands of President Putin.

If prices cannot be fixed in global markets, Europe and the United States, two of the largest consumers, will impose at least a windfall tax on the main profiteers of the war, leaving the most affected households and companies could redistribute that money, argues Nobel laureate Joseph. Stiglitz and others.

Europe is clearly at the forefront, Shell, Europe’s largest oil and gas companyin its latest quarterly earnings, highlights how revenues across the energy sector are booming.

Earnings of over $9bn (£7.8bn) in the previous quarter will bring a record profit of $30bn this year.

The UK has a windfall tax, shellhas not paid a single cent for declaring a swimming pool full of additional cash to the government.

Rishi Sunak invented the UK version of the windfall tax, which applies a 25% surcharge to the standard North Sea corporate tax rate, but offers a 91% deduction for investments.

Shell says it wants to pay for any sporadic taxes and has set aside $360 million just in case, but critics say the rules are lax and too easy to circumvent.

Without loopholes, a windfall tax applied across the energy industry could easily fill an estimated £40bn hole in government finances. At the moment, full use of Sunak’s tax incentives will only generate £5bn.

When the prime minister was in charge of No 11, he said he feared energy companies would stop investing and go elsewhere unless he was nice to them.

Many people in continental Europe live with similar fears. French energy company TotalEnergies posted his $17.3 billion profit in the first nine months of the year. That’s more than her $16 billion she posted last year as a whole.

As in the UK, these huge profits have thrown gasoline into the heated debate over whether to impose a windfall tax on energy companies to fund measures to protect consumers from price hikes.

But Emmanuel Macron, who has done a lot to keep France’s inflation rate in check to protect low-income households, reiterated his opposition to such measures in a primetime television appearance this week.

European Union Temporary windfall tax on profitswith the opposition of the French president, in many ways weaker than Britain.

Spain’s Repsol said it was considering moving investments from Europe to the United States, where regulation is more stable. Not surprisingly, after net income doubled his in the third quarter despite the prospect of higher taxes, Repsol was able to raise its dividend and buy back more shares than previously announced. rice field.

Corporate blackmail aside, some analysts argue the war is over, at least as far as the natural gas market is concerned.

European countries have filled their storage facilities and spot prices have fallen from €200 per megawatt hour (MWh) on 12th September to almost €50 per megawatt hour (MWh) this week.

Ships full of petrol have been seen queuing outside European ports, further driving prices down.

However, the prices charged to consumers are based on hedging agreements already in place at much higher prices.

Craig Lowrey, Principal Consultant at Cornwall Insight, explains:

The energy price cap across the UK, which stood at £4,357.65 in January, will only drop to £3,610.38 by the end of next year, Mr Lowry said. I want to avoid real hardships.

Without greater government intervention to limit the impact of these high prices, the war effort would dwindle and Putin would be spared.

US growth recovery will be short-lived

America is growing again.reported by the United States 2.6% annual growth rate It ended two consecutive quarters of recession from July to September.

it can’t last. The prospect of very high inflation and even higher interest rates will plunge the US into recession again next year.

Still, the president can offer voters a brighter prospect in the midterms. He should also be able to prevent Putin’s appeasement faction in the Republican Party from cutting vital weapons. UkraineEven if he can’t quite convince them to back a windfall tax on profitable energy producers.

https://www.theguardian.com/business/2022/oct/27/windfall-tax-on-oil-and-gas-firms-profits-could-go-to-those-in-greatest-need As the invasion of Ukraine continues, the West must tax the windfall of war profiteers.Philip Inman

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