Energy and Environment

More windfall taxes are not the answer to our energy woes

Mark Littlewood writes for The Times

IEA Director General Mark Littlewood has written for The Times arguing that more windfall taxes on energy profits would be a mistake.

Mark wrote:

“Raking off an even larger share of energy industry profits has a number of obvious political attractions. Portraying a plan to increase government revenues as being no more than taking an extra slice from “greedy corporations” is an easier soundbite than increasing the basic rate of income tax.

However, on economic grounds, there are many reasons to oppose sector-specific tax rates on profits.”

Mark also noted that energy profits are already taxed at an enhanced rate:

“Of course, we already have a swathe of specific taxes applying to energy companies. The North Sea fiscal regime effectively acts as a windfall tax. The energy profits levy already brings in many billions of pounds to the exchequer. Perhaps the government will conclude that having taken a number of strides down this path, it may as well continue in the same direction. But that would be yet another example of short-term political considerations trumping longer-term economic strategy.”

The full article can be read here.