Rees-Mogg warns businesses are not a 'honey pot' of windfall tax cash

Cabinet row over a windfall tax on energy giants’ massive profits as Jacob Rees-Mogg warns businesses are not a ‘honey pot’ to be ‘raided’ to solve short-term problems like the cost-of-living crisis

  • Jacob Rees-Mogg argued it is wrong to use oil and gas firms as cash cows 
  • Boris Johnson and Chancellor Rishi Sunak have not ruled out windfall tax
  • Labour say it would ‘raise billions cutting energy bills across the country’

More signs of a Cabinet rift over a potential windfall tax on soaring profits reported by energy giants emerged today when a senior minister warned that businesses were not ‘honey pots’ just to be raised in a crisis.   

Jacob Rees-Mogg argued it is wrong to use oil and gas firms as cash cows to get the Government out of a hole and fund measures to ease the cost-of-living crisis.

Boris Johnson and Chancellor Rishi Sunak have not ruled out the move, instead urging firms to invest their soaring profits, and Downing Street hinted that a decision would be coming ‘soon’.

And Labour leader Sir Keir Starmer argues a U-turn on opposition is ‘inevitable’ as the tax on North Sea firms would ‘raise billions of pounds, cutting energy bills across the country’. 

But the Brexit Opportunities Minister argued that the one-off measure on the companies’ soaring profits potentially to reduce consumer bills would ultimately see the public pay more tax. 

He told reporters: ‘Retrospective taxation is difficult because you are changing the understanding of what people do when they invest.

‘It’s difficult because tax on corporations ultimately falls on individuals anyway, it either falls on individuals because the companies to maintain their net margin around the world increase their pricing in the UK.

‘Or it falls on individuals because the profit doesn’t fall through to the dividends that fund their pensions.

‘So I think the idea of a windfall tax as a panacea to the inflation problem is wrong.’

Pressed if he would say never to such a tax, Mr Rees-Mogg said: ‘I’m not commenting on what the Chancellor will do, that’s a matter for him and his budget.

‘I’m merely saying there is this honey pot of business you can just raid whenever you feel like is not true.’

Jacob Rees-Mogg argued it is wrong to use oil and gas firms as cash cows to get the Government out of a hole and fund measures to ease the cost-of-living crisis.

Boris Johnson and Chancellor Rishi Sunak have not ruled out the move, instead urging firms to invest their soaring profits, and Downing Street hinted that a decision would be coming ‘soon’.

Chancellor Rishi Sunak has not ruled out imposing the measure, and has said ‘no option is off the table’ if companies do not increase their investment

Mr Rees-Mogg, who also holds the brief of government efficiency minister, added: ‘All taxation ultimately falls on individuals so when you’re calling for a windfall tax you’re saying you want to pay more tax.’

The idea of a windfall tax has gained popularity because energy firms are seeing soaring profits because of rising consumer prices, as fuelled by the pandemic and the war in Ukraine.

Chancellor Rishi Sunak has not ruled out imposing the measure, and has said ‘no option is off the table’ if companies do not increase their investment ‘soon’. 

Downing Street said on Friday that ministers ‘haven’t put a timeline’ on when firms must change their profits into spending, but reiterated a decision would come ‘soon’.

Labour has argued that a windfall tax could fund a VAT cut on energy bills and an increase in the warm home discount for those on a low income.

Offshore Energies UK, the energy industry’s trade body, has argued the tax would put investment and jobs at risk.

The UK must make sure it has a dependable energy supply to avoid future spikes in its cost, Prime Minister Boris Johnson has said.

Speaking from Powys in Wales, Mr Johnson told Sky News: ‘You’ve got to make sure that we don’t run into this kind of problem again, and it was the short-termism of previous Labour Governments that meant we didn’t have a dependable energy supply.

‘I care deeply about the crunch now, but what we have to avoid, also, is future crunches and future spikes in the cost of energy.

‘It is insane that this country is piping in electricity from the continent, from France.

‘Crazy, when we’ve got hydrocarbons of our own, that we’re continuing to take them from (Vladimir) Putin’s Russia.’

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