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The Guardian - UK
The Guardian - UK
World
Peter Walker

Time for another windfall tax?

Windfall taxes - remember them? The last one was introduced in Gordon Brown's very first budget and targeted growth in the value of utility companies following their privatisation, the cash being earmarked for employment schemes.

Now, with the owner of British Gas, Centrica, announcing a 35% rise in gas prices and a £992m profit, there's talk of a new one.

Both Brown and his chancellor, Alistair Darling, reportedly believe the time is right for energy companies to cough up some of the bounty they have enjoyed through soaring fuel prices.

The Mail, Telegraph and Times are not usually foes of big business, so the fact that all three papers feature - not unsympathetically - calls for the windfall tax on their front pages this morning might give the companies pause for thought.

The Mail devotes almost all its front page to the way energy prices "have allowed Shell, BP and Centrica ... to make £1,000 a second for the first six months of the year, a figure described as 'grotesque'".

Both the Telegraph and Guardian let their cartoonists mock the British Gas announcements. I'll leave you to work out which paper incorporates a fat cat in a pinstripe suit.

An open and shut case? This website's readers believe so, with almost three-quarters of people taking part in a poll on the business pages agreeing with the idea of a windfall tax.

But there are contrary arguments, some of which were outlined by the Guardian's Larry Elliott yesterday:

British Gas points out that it already pays a 75% tax rate on its gas production and pays a higher rate than any other FTSE 100 company. It also makes the perfectly valid point that ministers want energy companies to invest billions of pounds in renewables and in a new generation of nuclear power stations, and that clobbering the industry with a windfall tax might not be the best way to achieve that objective.

This is an extended extract from The Wrap, theguardian.com's round-up of the day's news.

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