Is it time for a windfall tax on energy companies? Judging by a poll during the first lockdown – which found more than half of the UK public would welcome an additional tax on businesses that had thrived because of the extraordinary circumstances of the pandemic – it would be a popular measure. A windfall is typically something you get for free, after all.
Energy policy has become increasingly muddled in recent years
Advocates often reference Chancellor Gordon Brown’s windfall tax on privatised utilities in 1997, which raised £5.2bn over a number of years and was justified on the grounds that corporate profits had risen due to failed government policy. But even in such circumstances, windfalls are a bad idea. Companies don’t pay taxes, people do. A windfall would reduce the dividends paid out to company shareholders. These companies are not owned by ‘fat cats,’ but by us all through pension funds and insurance firms.
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