As oil and gas prices decline, energy companies have urged ministers to reduce the windfall tax in advance of a package of energy security measures anticipated to be announced on Thursday.
Offshore Energies UK has stated that the windfall tax should be eliminated when prices decrease.
According to the Financial Times, ministers are planning to offer tax relief to energy companies.
Also the Treasury insists that it monitors all taxes.
To lower energy costs for households and businesses, the government taxed oil and gas firms’ windfalls.
A windfall tax is used to target companies that profit from something they did not cause. Recently, the profits of energy companies have skyrocketed, initially as a result of rising demand after Covid restrictions were lifted, and then as a result of Russia’s invasion of Ukraine, which drove up energy prices.
Oil and gas prices have decreased from their recent peaks.
David Whitehouse, CEO of Offshore Energies UK, stated that the windfall tax has “damaged the confidence” of businesses to invest in the UK’s long-term energy security.
Because conditions and prices have altered, changing this tax would help restore confidence, he said.
He added that it would also encourage companies to invest in the United Kingdom’s energy industry. Also in new technologies like offshore wind, hydrogen, and carbon capture, as well as in employment.
On Thursday, the government is anticipated to outline measures to improve the energy security of the United Kingdom.
A Whitehall source verified that the plans, which will be presented by Energy Security Secretary Grant Shapps, will concentrate on lowering wholesale electricity prices in the United Kingdom and lowering energy bills for consumers and businesses.
According to the Financial Times, ministers have been in discussions with energy companies about adjusting the windfall tax if oil and gas prices decline below a certain threshold.
The shadow climate minister, Ed Miliband, said the report confirmed “Fossil Fuel Thursday” next week.
“Giveaways to companies that are already making record profits in exchange for a policy,” he said. That will not affect energy costs or security, swindling the public while destroying the environment.”
Treasury officials insist they do not comment on speculation.
The windfall tax, however, “strikes a balance between funding cost-of-living assistance with excess profits and encouraging investment.”
It added that “the more a company invests in the United Kingdom, the less tax they will pay.”
