Liz Truss has defended energy company profits in the face of increasing price increases, stating that profits should not be deemed “dirty and evil.”
The aspirant to the Tory leadership stated that windfall taxes on earnings, which are advocated by some to pay assistance for households, are about “bashing business.”
She stated that reducing taxes was the most effective strategy to reduce wintertime living expenses.
However, Rishi Sunak’s opponent stated that millions would be at risk of poverty if energy subsidies were not increased.
He has proposed spending billions of pounds on additional winter payments to the elderly and the low-paid, believing that tax cuts will not be sufficient to assist them.
Mr. Sunak has also confirmed in The Times that he would be willing to borrow to cover these expenditures as a “last resort” if they cannot be covered by “savings throughout Whitehall” or budget cuts.
In the meantime, Chancellor Nadhim Zahawi stated that new cost-of-living policies will be “ready to go” when the new prime minister assumes office on 5 September.
Over a visit to the Airbus factory in Broughton, north Wales, Mr. Zahawi told broadcasters, “We are considering all of the options for bringing in additional help during the winter months.”
Increasing the windfall tax on energy corporations could be an option.
There has been chatter about extending the present windfall tax, often known as the energy earnings levy, to electricity generators. Currently, the tax applies exclusively to oil and gas companies.
How to best respond to soaring energy prices has become a central issue in the race to succeed Boris Johnson as prime minister.
Energy has come to dominate the debate in recent days since prices are expected to soar to more than £4,000 per year for the average home in the next year.
Due to surging gas and oil prices, energy corporations have earned record profits in recent months, leading to calls to further tax them to offset rising costs.
BP reported its largest quarterly profit in 14 years, $8.45bn (£6.9bn), earlier this month, while Shell announced a record profit of $11.5bn (£9bn).
Since the end of May, when he was chancellor, Mr. Sunak imposed a 25% windfall tax on the revenues of the oil and gas industry.
However, while campaigning in Cheltenham, Ms. Truss stated categorically that she would not support windfall taxes, calling them a “Labour notion.”
The foreign secretary continued, “It’s all about trashing business, and it sends the wrong impression to overseas investors and the people.
A windfall tax is a one-time levy imposed by a government on a business and aimed to target companies that have benefited from unforeseeable events.
When asked about how the public views record earnings, she added: “Profit is not a filthy word in my opinion, and the fact that it has become one in our culture is a major problem.
“The energy titans in an oligopoly should be held accountable, and I would ensure that they are held accountable vigorously.
“However, as Conservatives, we shouldn’t use the word ‘profit’ as though it’s something filthy and terrible.”
Labour has proposed a three-month retroactive extension of the windfall tax to January, stating that it will generate an additional £1.9 billion for energy support programs.
The party has stated that it might finance its plan to tax prepayment energy consumers the same as those who pay by direct debit.
Between this October and next March, the increased price cap for prepaid gas and electricity could result in 4.5 million families paying £184 more than those who pay by direct debit.
Labour has stated that it will equalize the limits for the two payment options to prevent prepayment meter users from overpaying.
The party has characterized the statement as the initial phase of a winter energy plan it will publish in the coming days.
The Liberal Democrats have also demanded an extension of the windfall tax to fund their plan to eliminate the anticipated energy price cap increase in October.
Ms. Truss’s remarks came amid increasingly acrimonious confrontations between the leadership rivals regarding their respective winter aid strategies.
According to the foreign secretary, her plan to reverse National Insurance increases and eliminate green energy bills will benefit households and stimulate the economy.
However, speaking at the Cheltenham debate, Mr. Sunak stated that tax cuts would put “millions of really vulnerable people at risk of poverty.”
He claimed that retirees “cannot work longer hours” and were “already depleting their retirement resources.”
If we fail to provide direct assistance to millions of vulnerable retirees, it will be a moral failure for this party, and the public will never forgive us.
In addition to the £15 billion in payments he announced as chancellor in May, he has promised to give further payments to needy groups this winter.
Mr. Sunak has stated that he is willing to borrow money to pay his plan, but this may be kept to a minimum through government-wide “efficiency savings.”
He wrote in The Times that the cost appeared to be around “the low to middle billions,” adding, “However, I’m pragmatic. It could be expanded.”
This may necessitate “difficult choices” to “halt or pause some government activities,” he warned, as assisting people in the next months “must be the priority.”
Mr. Sunak said: “However, I will also be sincere. I’m willing to resort to restricted, temporary, one-time borrowing if that’s what it takes to get us through this winter.”
