Correction: We have updated this blog. In our original analysis we didn’t make a clear distinction between the revenue that would be raised under the existing system of taxing North Sea oil and gas, and the additional revenue that would be raised under our proposal for a new 95% excess profits tax. We estimate that under our proposal an additional £12.5bn of revenue would be generated each year for two years. The total revenue raised is estimated to be £46 billion.
We are proud of the research we do at TJ-UK but we accept that if we do get it wrong, it is right that we hold our hands up. With thanks to Dan Neidle for spotting this error.
A 95% windfall tax on the excess profits of North Sea oil and gas companies could raise an additional £12.5 billion a year for two years, our analysis has found. This would drive overall government tax revenues from oil and gas profits up to £46bn a year, creating significant revenue to tackle the cost of living crisis.
New Prime Minister, Liz Truss MP, is poised to spend £150bn over two years freezing energy prices with speculation abounding about how the measure will be funded.
Modeling by Tax Justice UK, found that a 95% excess profits tax to be introduced instead of the government’s Energy Profits Levy, could cover a significant proportion of the cost of living package that the government is set to announce.
Tax Justice Executive Director, Robert Palmer, said: “A bigger windfall tax to clawback oil and gas excess profits is a no brainer. The Truss government should impose a 95% tax on oil and gas windfall profits. This would provide substantial funds towards any energy support package.”
“A windfall tax on oil and gas company excessive profits would ensure that these companies aren’t profiteering during these difficult times.”
The modeling is based on the £170 billion in excess profits that UK gas producers and electricity generators are predicted to make over the next two years as set out in a leaked Treasury briefing.