Windfall taxes are nothing new. Margaret Thatcher’s government was one of the most notable users of the tactic – with one-off levies on banks and oil companies for making excess gains in the early 1980s. Perhaps the fact that such duties find favour with the public surprises some who think economic populism is passé. But with gas prices trebling and the bosses of fossil fuel companies proclaiming “cash machine” profits, surely Labour’s Ed Miliband is right to call for a one-off increase in corporation tax on North Sea producers to fund lower bills for consumers.
Big oil’s claim that it is paying its fair share to the Treasury is not credible, given that handouts from the state have often actually exceeded the tax take that the industry generates. Between 2018 and 2020, Shell and BP, which together produce more than 1.7bn tonnes of greenhouse gases a year, paid no corporation tax or production levies on North Sea oil operations and claimed tax reliefs of nearly £400m.
