UK Chancellor of the Exchequer Rishi Sunak said this week that he was "pragmatic" about the idea of a windfall tax on the profits of oil and gas companies as a possible way to raise money to provide more help to households facing the strain of higher energy prices.
“I'm not naturally attracted to the idea of them (windfall taxes) but what I do know is that these companies are making a significant amount of profit at the moment because of these very elevated prices,” Sunak said.
He repeated his view that no options were off the table if oil and gas companies did not provide significant investment soon in Britain.
“I find there are two camps of people actually, there's some people who think windfall taxes can never be the answer, And then there are other people who think windfall taxes are an easy, quick, simple answer to solve every problem,” the British Indian finance minister told BBC.
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“I'm not in either of those schools of thought, I'm pragmatic about it,” he said.
Asked about the chance of fresh support for households, Sunak said he had previously said he was ready to do more and he wanted to see how energy costs develop ahead of a half-yearly review in October which would “help us to get the decisions right”.
Britain’s Opposition parties want to tax oil and gas firms' soaring profits to help households grappling with rising bills while energy firms have been posting huge profits this year.
The UK government has argued such a tax could deter the investment it wants to see in new energy infrastructure – but has not ruled one out. Sunak feels windfall taxes cannot be seen as "an easy, quick simple answer to solve every problem".
It comes as the Office for National Statistics (ONS) found that high prices are beginning to have an impact on the economy, as it shrank by 0.1 per cent in March as people cut back spending. The Russia-Ukraine crisis and post-pandemic challenges are seen as behind the trend.
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Sunak said: “The UK economy recovered quickly from the worst of the pandemic and our growth in the first few months of the year was strong, faster than the US, Germany and Italy, but I know these are still anxious times.
“Our recovery is being disrupted by Putin’s barbaric invasion of Ukraine and other global challenges but we are continuing to help people where we can. Growth is the best way to help families in the longer-term so as well as easing immediate pressures on households and businesses, we are investing in capital, people and ideas to boost living standards in the future.”
(With Reuters Inputs)