The black hole in Jeremy Hunt’s energy windfall tax

Jeremy Hunt has supposedly just closed a black hole in the government’s finances. But is another black hole opening up before his eyes?  

One of the more popular announcements in the autumn statement on 17 November was a rise in the windfall tax applied to oil and gas companies from 25 per cent to 35 per cent. It was popular because it didn’t affect ordinary people directly and because it feeds into the narrative of greedy oil companies making fat profits while households struggle with their energy bill.     

The 35 per cent windfall tax comes on top of corporation tax, which oil and gas companies already pay at a higher rate than other businesses. Together, corporation tax and the windfall tax will mean oil and gas companies paying a rate of 75 per cent on their profits – the kind of tax burden more associated with Labour’s punitive regime of the 1970s (when 80 per cent was the top rate of income tax).