The chancellor has said “no option is off the table” when asked about the possibility of a windfall tax on oil and gas firms to help ease the cost of living.
Rishi Sunak was speaking as energy companies continue to benefit from rocketing prices, helped by an increase in demand as the world emerges from the worst of the coronavirus pandemic.
Russia’s invasion of Ukraine has also increased prices, due to the effect sanctions and war have had on supply.
Mr Sunak said: “I’m not naturally attracted to the idea of windfall taxes in general. I find that people fall into two camps on windfall tax.
“There is a group of people who think you can never have a windfall tax, and there’s another group of people who think they’re a very easy answer to every problem. I’m not in either of those camps – I’m pragmatic about it.
“What I do know is that these companies are making very significant profits right now because of the prices that we’re seeing.
“What I want to see is significant investment back into the UK into the economy for jobs and energy security and I want to see that soon. If that doesn’t happen then, as I’ve said, no option is off the table.”
A windfall tax is a one-off tax imposed by a government on firms that have benefited from something they were not responsible for.
The prime minister has previously expressed some reluctance to consider the idea but, with record-breaking rises in energy prices, hikes in council tax and national insurance, as well as high fuel costs and climbing inflation, there are growing calls for a change in course.
Boris Johnson says government will “have to look at” windfall tax
Earlier on Thursday, Prime Minister Boris Johnson suggested the government would “have to look” at the idea of a windfall tax.
“The disadvantage with those sort of taxes is that they deter investment in the very things that we need to see them putting them in,” Mr Johnson told LBC.
“They need to be investing in new technology, in new energy supplies for the UK.”
But BP chief executive Bernard Looney recently said that his company’s investment plans would not be affected by any windfall tax.
When this was put to him, the PM replied: “Well then we’ll have to look at it.
“What I say is I want them to make those investments – they’ve got to be making those investments – in new energy supply for our country.”
When pushed again about the possibility of a windfall tax, Mr Johnson said: “I don’t like them.
“I don’t think they’re the right way forward.
“I want those companies to make big, big investments.”