The Liberal Democrats have today tabled an amendment to backdate the government’s delayed windfall tax, raising an extra £3 billion from oil and gas giants to help with the cost of living.
The party is pushing for a vote on the amendment in Parliament today, putting pressure on Conservative MPs to back the move.
After months of calls from opposition parties, the Government announced an emergency levy on the super profits of North Sea oil and gas producers with effect from 26 May 2022.
The Liberal Democrats, who were the first party to call for a windfall tax in October 2021 have tabled an amendment to the government’s proposed legislation that would back-date the tax to the last quarter of 2021. This would capture the record super-profits seen by oil and gas companies since October.
Oil and gas prices began to rapidly rise at the end of 2021, leading major oil and gas producers to see eye-watering profits. At the time, the head of BP described his company as a “cash machine”.
The legislative change proposed by the Liberal Democrats would allow the UK to tax companies’ super-profits in Q4 2021 and Q1 2022, which are currently outside of the scope of the tax. The party estimates that this could raise up to £3 billion for the UK.
This could unlock extra funds to support households with the cost-of-living crisis. The Liberal Democrats have proposed increasing rural fuel duty relief from the current 5p to 10p per litre, and expanding it to more areas; and freezing rail fares for one year to support commuters.
Liberal Democrat Treasury spokesperson Chrsitine Jardine MP said:
If this Conservative Government had not sat on its hands for so long a windfall tax would already be in place helping those hit the hardest. Instead, those struggling with the cost of living crisis are still waiting for support while their energy bills continue to go through the roof.
The Conservatives have ignored this problem and failed to take bold action for months. Now if Ministers are serious about supporting people during this crisis they will back-date the windfall tax and add support to those who need it most.
It can’t be right that while people up and down the UK have struggled to get by, the oil and gas barons have continued to make their billions all the while this complacent Government has stood by and watched.
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One Comment
It is never fair to announce any policy change and then backdate it’s implementation date to a date before the policy change were announced. Doing this in the field of criminal law would mean that people could be convicted of criminal behaviour for doing something that at the time they did it was legal. In the field of taxation, retrospective taxation changes feel very much like legalised theft as the government is deciding, after applicable taxation has been deducted, to go back and levy an additional tax on previously taxed income. So rather than calling for the 25% additional tax to be retrospectively applied to before the date the government announced its intention to apply the additional levy, the Liberal Democrats should be calling on the rate of Additional tax to be say 30%. This 5% additional levy applied over the full 3 years would like raise the equivalent of backdating the 25% by 6 months, and would be a much fairer way of doing it. (Though I understand that the backdating suggestion is just being made for political posturing reasons rather than as a serious attempt to improve the Bill.)