Is business turning on business? It appeared so yesterday morning when the well-respected Tesco chair John Allan said the case for a windfall tax on energy giants had become “overwhelming.” Needless to say, Labour jumped all over this, just as they did when the former Financial Times editor Lionel Barber said the same.
But alas, the case is not overwhelming. In fact the calls for it say plenty about Britain’s attitude to business and the apparently unfashionable art of making money.
We should return to the grim days of spring 2020. As the pandemic whistled around the world and governments fell over themselves to lock us all up, demand for oil cratered. Shell lost somewhere in the region of £22bn in that fiscal year, a year in which – due to levies and excise duties and so forth – the firm also paid taxes of £38bn, per its annual report. BP meanwhile lost £16.5bn, and yet still paid around £29bn in taxes.
There are many parts of the pandemic that we will all choose to forget but it is not a memory lapse on your part if you fail to remember the calls for an energy giant bailout, because there weren’t any. The losses were not decried by opposition politicians as an example of the economic damage wrought by lockdowns that are beginning to look a tad shakier in their logic than they once seemed. Nobody was demanding supermarkets – to pluck an example out of thin air – cough up anything extra in lockdown taxes whilst they benefitted from the hospitality industry being shut down.
There are myriad reasons why a windfall tax is wrong-headed, from deterring the firms in the sector from investing to damaging the UK’s international reputation – such as that it has left – as a business-friendly destination. The fact that energy firms already pay huge amounts of tax across the world even when they’re not profitable, as above, is another. But above all is the very simple, and indeed fair, logic of risk and reward.