UK Unveils Windfall Tax on Utility Providers as Energy Inflation Soars
As energy expenses become increasingly unsustainable for most UK households, the country’s government on Thursday imposed a 25% windfall tax on utility providers’ profits.
“We are introducing a temporary, targeted Energy Profits Levy charged on profits of oil and gas companies at a rate of 25%… We’re also building in a new investment allowance that doubles the relief for the energy companies that invest their profits in the UK,” said the country’s Chancellor of the Exchequer Rishi Sunak as cited by Reuters. According to the official, energy providers’ profits have risen too sharply amid surging commodity prices, sending UK citizens’ pocketbooks into a cost-of living crisis.
Up until now, the UK government has refrained from imposing a windfall tax, instead arguing that it would impede investment into the country’s energy infrastructure. However, the new tax is expected to raise about $6.3 billion in revenue, which will be distributed to UK’s poorer households, which currently sit at around 8 million. “We know that households are being hit hard right now… Fiscal support should be timely, targeted and temporary,” said Sunak.
After rising an astronomical 54% at the beginning of April, the energy price cap is expected to jump by another 40% come October, to a record-breaking $3,518. It is forecast that some 12 million UK households would succumb to fuel poverty as a result.
Information for this briefing was found via Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.