At the UN General Assembly recently, UN leaders called on all developed countries to impose a windfall tax on fossil fuel companies.
Earlier we mentioned that the new Prime Minister’s energy plan does not impose a windfall tax on energy companies, but temporarily freezes the ceiling on household energy bills through borrowing.
Whether or not a windfall tax is levied in the future, we should understand what a windfall tax is? You have a right to know how this will affect our lives.
The windfall tax is a special policy proposed by the government for a certain period, and a one-time tax is charged to the company.
Energy companies are making more profit from oil and gas than before amid soaring energy bills.
When the government collects a higher proportion of the tax, it controls the profits of energy companies to a certain extent.
At present, some European countries have announced to impose windfall tax on energy companies.
Current Taxation of Energy Companies
Before looking at the impact of windfall tax on life, let’s take a look at the current background of British energy companies.
Since oil and gas companies operating in the North Sea are more profitable, they pay 30% corporate tax on profits, plus a 10% surcharge.
Despite paying a higher corporate tax of 19% than other companies, the tax due has been reduced due to the decommissioning of North Sea oil platforms in recent years.
Why the Windfall Tax
Many experts in the UN General Assembly have mentioned the importance of sustainable development. Sustainable economy and sustainable energy should both be taken seriously.
The energy industry is enjoying hundreds of billions of dollars in profits as people become dependent on energy and the impact of war on energy rationing.
However, while families are faced with food and energy choices, our planet is “burning”.
Given the deeply unequal nature of this crisis, some countries should address the issue of household survival by balancing taxes.
The Impact of Windfall Tax on Life
If the windfall tax is decided, on the one hand, the price of oil and gas will rise rapidly.
Despite the previously announced two-year freeze on energy bills, the impact on oil prices will be evident.
On the other hand, Labour’s previous ideas for taxation said an extra 10% tax on North Sea oil companies would raise £1.2bn a year to ease the crisis.
Therefore, the introduction of windfall tax will at least affect users who use oil and see price changes in the short term.