Rishi Sunak will announce an unexpected tax for energy companies

Rishi Sunak will push a button for a controversial unexpected tax for energy companies on Thursday as he sets out measures to alleviate the pain of rising household bills.

The chancellor has confirmed that he will announce new support for people facing a cost-of-living crisis. The measures are expected to help the poorest households as rising inflation pushes up prices for everything from food to fuel.

Sunak is expected to announce an increase in the warm home discount program, which is worth 150 to 3 million low-income households. This amount can climb up to 500 pounds.

The government could also present a planned increase in benefits, which was expected next year. Sunak could also choose to fund the energy bill directly or offer the council a tax rebate.

The measures will be partly financed by an unexpected tax on energy companies following a tough fight within the government for a policy that some cabinet ministers, including Secretary of State Kwasi Kwarteng, strongly opposed. The measure could be extended to all electricity producers and may include exemptions for investment.

The party’s high official admitted that the decision had caused a rift in the government. “The arguments have been rigorously tested within both the Treasury and the government, and there is a lot of pressure to ensure that profits are worth the pain and do not jeopardize investment,” they said.

“We do not want to introduce random taxes that make the environment unpredictable for global companies to go anywhere. We need to set the bar high and do something really effective and put in place massive guarantees to ensure that we do not jeopardize investment. ”

The turnover on the unexpected tax will be considered a win for Labor Keira Starmer, who has been calling for such a measure for a long time. A conservative official said he would draw a clear dividing line.

“For conservatives, raising taxes is a means of ending public service funding and helping those who can’t help themselves. So each package will focus on what allows us to help people who are suffering, “they said.

“There will be a new package that will explain where some additional funding will be obtained … It will be really impressive and comprehensive.”

Oil and gas producers benefited from skyrocketing world energy prices during the Russian war in Ukraine. Higher gas prices have increased wholesale prices in the electricity market, including some producers of renewable and nuclear energy.

The Treasury allegedly analyzed whether the tax should be extended beyond North Sea operators such as BP and Shell to producers, including renewable energy operators such as wind farms.

It is estimated that the plan could tax more than £ 10 billion in excess profits, although City analysts said the figure is far beyond their estimates. A Labor plan for a one-off tax applied only to North Sea oil and gas producers would gain an estimated £ 2 billion.

A Treasury spokesman said: “We understand that people are struggling with rising prices, which is why we have provided £ 22 billion in support to date. The Chancellor was clear that as the situation evolved, so would our reactions, with priority being the number one priority for him. “

Economists say the living costs of Britain’s poorest households are expected to rise almost twice as fast as the richest when energy bills rise this autumn.

The Institute for Fiscal Studies (IFS) said the new increase in gas and electricity bills expected in October could lead to an average annual inflation rate of up to 14% for a tenth of the poorest households.

The energy crisis hit a sharp Wednesday this week as Jonathan Brearley, chief executive of energy regulator Ofgem, indicated that the energy price cap would rise by a further £ 830 to almost £ 2,800 in October.

The increase is likely to disproportionately affect poorer families, as most of their total spending goes on energy. The IFS said a tenth of the poorest households usually spend almost three times their budgets on gas and electricity than a tenth of the richest.

This means that low-income houses experience much higher inflation than the rich. The IFS predicts that while inflation for those on the verge of subsistence will reach 14% this autumn, the richest 10 could reach around 8%. In all households, inflation is likely to reach 10%, the highest rate since 1982.

In a sign of growing pressure on households, Wednesday’s data showed that average petrol prices reached a new record of 170.4 pa per liter, compared to 129 per liter a year ago. Diesel rose to 181.4 p, compared to 131.3 p a year earlier.

Source link

Leave a Comment

Your email address will not be published.