British Finance Minister Jeremy Hunt announced Thursday that the government will increase the windfall tax on oil and gas companies and also extend it to power companies in an attempt to raise money for public finances. The measure is intended to partially alleviate the delicate economic situation in the country, officially in recession according to the Office of Budgetary Responsibility (OBR) and with inflation that will be at 9.1% this year,
Hunt said the levy would increase to 35% from its current rate of 25%. It will also apply to electricity generators with a 45% tax from January 1.
Hunt also announced tax increases on the rich to reduce net debt to gross domestic product (GDP) by 2028. The minister announced a reduction from £150,000 (€171,000) to £125,140 (€143,240) the income threshold from which the highest band of income tax, 45%, will be paid, while the minimum of tax-free annual earnings will be frozen in order to include more taxpayers in the coming years.
Rising oil and gas prices following Russia's invasion of Ukraine have sent household energy bills skyrocketing, triggering Britain's worst cost-of-living crisis in generations.
Currently, the cost of electricity production from gas plants is usually the reference to set the wholesale price of electricity that helps determine how much citizens pay for their energy.
This means that renewable energy generators, such as wind or solar, and nuclear power plants can benefit from high wholesale prices.
In his appearance, Hunt said that public spending will grow more slowly than the economy, but overall spending on public services will increase in real terms over the next five years. "We are going to grow public spending, but it will be at a slower rate than the economy," Hunt said in a speech to Parliament.
"For the remaining two years of this 'Spending Review,' we will protect the increases in departmental budgets that we have already set in cash terms. And then we will grow resource spending at 1% per year in real terms, over the next three years. ".