2022 has marked record profits the oil and gas companies. The Guardian reported that in the first quarter of this year, the largest 28 global companies made almost 100 billion dollars. Profits have soared in the wake of the war in Ukraine, and widespread boycotts of Russian energy by the West.
Amidst this backdrop the Labour party has been calling for a windfall tax on oil and gas companies. A windfall tax is a one off tax designed to target a company, or companies, who are benefiting from events they are not responsible for, this benefit is known as a windfall. Shell has made so much money, it is spending it on buying back its own shares, and paying out big dividends. However, the Prime Minister has so far been reluctant to impose fresh taxes. He has cited the fact that BP has planned to invest £18 Billion in the UK over the next eight years, and warned that one off taxes could disincentivize further investments. However BP executive Bernard
Looney appeared to rubbish these claims by insisting planned investments would go ahead even in the event of a windfall tax.
Labour argue that the one off tax will bring in money which can help households with their energy bills. The opposition party claims this could save most households £200, and £600 in the case of those most in need. They also point to the fact other European countries, like Spain and Italy, have already imposed windfall taxes. Critics argue that oil and gas companies already pay double the tax rate of an ordinary company, and operate under a special tax regime.