Windfall tax oil /gas companies

MouldyOldDough

Wouldn't a windfall tax, imposed by government on oil and gas companies simply increase the price paid by consumers? 

QrizB

MouldyOldDough said:

Wouldn't a windfall tax, imposed by government on oil and gas companies simply increase the price paid by consumers? 

No, they are separate businesses.

Shell Energy & British Gas, for example, are separate businesses from their respective parents Royal Dutch Shell and Centrica.

[Deleted User]

MouldyOldDough said:

Wouldn't a windfall tax, imposed by government on oil and gas companies simply increase the price paid by consumers? 

But it might reduce the size of your future pension. FWiW, it would seem that our beloved leader wants to see the money invested in future energy. It could perhaps be used to offset some of the forecast 100% overspend on the new Hinckley Point nuclear plant.

Dave.44

MouldyOldDough said:

Wouldn't a windfall tax, imposed by government on oil and gas companies simply increase the price paid by consumers? 

Yes it would. That's why the government are handing out compensation. They will get the money from a windfall tax. Just wait!! 

spot1034

The ultimate consequence of a windfall tax on companies who make profits largely not from their UK operations but from their activities all around the world, is that they will move their HQ away from the UK and choose to be domiciled in another location, thus greatly reducing the tax they currently pay to the UK government.

wittynamegoeshere

Looks like the energy company PR departments are busy posting here as usual.

The energy industry is making ridiculous profits at the moment.  They are not going to have a tantrum and shut down if their profits are reduced from £stupid amounts to just £lots.

They must know they're making excessive profits, largely as a result of war and suffering, so will not be at all surprised if they are asked to give back just some of the money they've taken from the people.  They will still be left with plenty, they won't starve.

However, this government may or may not, possibly depending on what size of "donations" their party has received from this industry.

MattMattMattUK

wittynamegoeshere said:

Looks like the energy company PR departments are busy posting here as usual.

Just because someone thinks you are wrong does not mean that they work for whoever you are irrationally criticising.

wittynamegoeshere said:

The energy industry is making ridiculous profits at the moment.  They are not going to have a tantrum and shut down if their profits are reduced from £stupid amounts to just £lots.

They are making large, short term profits, however they made losses or minimal profits in 2020 (when they actually had to pay people to take oil off their hands) and they have had to take losses in the tens of billions range as a cost of exiting Russia. The cost of exiting Russia has wiped out all profit for both BP and Shell from their entire global operations so far this year, the figures in the headlines are only part of the story.

wittynamegoeshere said:

They must know they're making excessive profits, 

Define "excessive profits" and who gets to decide? They are selling a global product in a global market place at a global global price. 

wittynamegoeshere said:

largely as a result of war and suffering,

Their profits are currently the result of several factors, the Russian invasion of Ukraine, the global economy coming out of Covid lockdowns, the West transitioning away from coal (and to an extent oil) as well as China's push for gas. 

wittynamegoeshere said:

so will not be at all surprised if they are asked to give back just some of the money they've taken from the people. 

They have not "taken" money from anyone, they have sold a product globally and made a profit it doing so. They already pay Corporation Tax at 30% vs the 19% most companies pay, they are also being charged an additional 25% this year as well.

wittynamegoeshere said:

They will still be left with plenty, they won't starve.

Oh look, a straw man. It is not about starving or not, excessive taxes discourage global investment. We should be pushing to build more nuclear and renewable power, to minimise the impact of a fluctuating global energy market, not imposing silly taxes on global companies because some people do not understand economics. 

wittynamegoeshere said:

However, this government may or may not, possibly depending on what size of "donations" their party has received from this industry.

The government is already imposing an additional 25% tax on oil companies profits, bring their tax rete to the highest rate of any advanced economy.

I have no love for this government, I think fossil fuels need to be phased out, but taxing global companies at a punitive rate because they happen to be domiciled in the UK is not going to benefit us in the medium or long term, even if it does lead to a short term gain.

Sterlingtimes

spot1034 said:

The ultimate consequence of a windfall tax on companies who make profits largely not from their UK operations but from their activities all around the world, is that they will move their HQ away from the UK and choose to be domiciled in another location, thus greatly reducing the tax they currently pay to the UK government.

Ultimately, the profits are snatched from investors including those in UK pension funds. I wrote to my Conservative MP, Saqib Batti, to ascertain whether he is comfortable with the windfall tax. He is. Ordinary people will be paying for this indirectly.  

wittynamegoeshere

Sterlingtimes said:

Ultimately, the profits are snatched from investors including those in UK pension funds. I wrote to my Conservative MP, Saqib Batti, to ascertain whether he is comfortable with the windfall tax. He is. Ordinary people will be paying for this indirectly.  

Ahh, the old poor starving pensioners argument that always gets lobbed in when anyone questions whether it's OK for massive companies to make huge profits at the public's expense.

Any tax or expenditure always comes at the expense of something or someone else.  This is just how the world works.

Perhaps shareholders could set up a charity so that members of the public can donate some of their money to them.

Evan3020

Shareholders are members of the public.
I am sorry the world does not work the way you want it to.

Mstty

The emotion side of things suggests the energy companies (all) should share their profits out of goodwill.

The reality is that making them do this will ultimately drive investment out of the UK.

There is no easy answer here. Despite believing the news hyper everything up this is an energy crisis.

So watch this space and by the sounds of it Truss will get in which means the green levies will go off all bills and who knows what else.