BP and Shell work to avoid windfall tax

January 11, 2022

bp and shell work to avoid windfall tax

There is a huge political debate around the cost of energy taking place in the United Kingdom at the moment. Members of the Labour Party and the conservative government led by Prime Minister Boris Johnson are going at it.

The two sides cannot agree on the best way to tackle the soaring energy bills that are keeping British people up at night.

LaBP and Shell work to avoid windfall tax as Labour Party wants to tax tehem

The Labour Party seems to be winning the argument in the media. Their plan involves more taxes on oil and gas companies like BP and Shell.

Those companies have seen their profits go up as the average customer pays a lot more for way less.

A British household is expected to pay $1,075 more in energy bills this year. Heating and lighting a home have become a real hassle for many.

The left is offering a windfall tax on companies that operate in the North Sea. The goal is to help households cut their bill by $272.

Concretely, the Labour Party wants to increase corporate tax by 10 percent for one year. The move would make it possible to get rid of the 5% sales tax on energy for one year.

Labour is also proposing to increase energy subsidies for poor households from $190 right now to $545. While it is easy to link skyrocketing energy prices to local politics, the problem is global.

America is dealing with inflation, and wholesale European gas prices have gone up 400% compared to the previous year. Electricity prices are up 300 percent during the same period.

The government has not shown much interest in these proposals.

UK government resists call for windfall tax.

Conservatives do not think that the steps proposed by the Labour Party go in the right direction. Cabinet minister Nadhim Zahawi claims those proposals will hurt companies that are already struggling in a significant way.

Mr. Zahawi believes that it makes more sense to focus on creating better jobs. However, the COVID-19 pandemic has been a drag on the economy.

Many European countries have adopted a different approach and have taken some measures to bring a form of relief to struggling households.

Johnson, who has seen his poll numbers go down in epic fashion recently, is not ready to take the jump.

He still has the backing of the energy companies. BP and Shell work to avoid windfall tax

BP and Shell work to avoid windfall tax

Oil & Gas UK, which represents the industry, says such a measure would make companies less interested in investing in the country.

According to the trade association, such an outcome means more shortages for the customer.

This opposition comes after companies like BP and Shell posted billions in profit in the past year. Some observers have suggested that those companies do not care about households with rising bills.

British energy supplier SSE has landed in a lot of trouble for telling customers to cuddle their pets to reduce their heating bills.

After a huge backlash, the company was forced to apologize. So, why are energy bills going up?

Several factors contribute to soaring energy bills.

Several factors have allied to make this problem worse. The cold weather has contributed to the current landscape where prices go up with no end in sight.

Moreover, the gas flow from Russia has gone down, and France has experienced frequent plant outages. Those two additional elements also played a part.

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