UK announces extraordinary 25% tax on profits of energy producers

The announcement marks a change of heart for Prime Minister Boris Johnson’s government, which had previously opposed unexpected taxes, calling them a deterrent to investment.

Facing intense political pressure to provide more support to taxpayers, what political opponents and activists have called a cost-of-living crisis, Finance Minister Rishi Sunak said energy companies were making extraordinary profits while the British struggled. Was doing.

Sunak told parliament, “We will introduce a temporary and targeted levy on energy profits, but we have included a new investment allowance in this levy, which means companies will have a new way to reinvest their profits.” And there will be significant incentives.”

Sunak did not refer to this as an extraordinary tax. He said it would raise £5 billion ($6.30 billion) over the next 12 months.

He also said that there will be a new investment allowance which will almost double the tax relief that companies get on their investments.

Financial markets had already widely expected the announcement, but shares of Harbor Energy, Britain’s largest North Sea oil and gas producer, turned negative after Sunak’s announcement, trading down 0.7% and European Oil and gas companies were underperforming the broader index. Shares of British North Sea-focused oil company Enquest fell 2%.

Shares of oil majors BP and Shell, which are international companies and therefore less influenced by UK politics, came down after the announcement but recovered and were up about 1% at 1146 GMT.

Mr Sunak said the aid package was worth £15 billion and would support about a third of UK households.

On Tuesday Britain’s energy regulator said gas and electricity bills would rise 40% in October.

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($1 = 0.7942 pounds)

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