The UK raises unexpected taxes on energy companies and bets on nuclear power

CNN Business

UK government promenade a unexpected tax The oil and gas companies should extend the collection to the electricity generators, where they would compete for it balance its budget Center economic downturn. It is also investing in nuclear energy for the first time in decades.

British Finance Minister Jeremy Hunt announce The actions took place on Thursday during the delivery of the government’s medium-term budget, which laid out plans to raise taxes and cut public spending.

Starting January 1, the energy dividend tax on oil and gas companies will rise from 25% to 35% and will remain in place until the end of March 2028. This brings the total tax on the sector to 75%, according to the Treasury Department.

There will also be a new temporary tax of 45% on the surplus profits of electricity generators during this period. In the UK, electricity prices are tied to wholesale gas prices, which means that many power generators also enjoy huge profits.

Combined, these measures will raise £14 billion ($16.5 billion) next year and More than £55 billion ($65 billion) between 2022 and 2028.

There have been growing calls in Britain for higher taxes on the windfall profits enjoyed by oil and gas companies Earnings recording This year thanks to the price hike caused by the Russian invasion of Ukraine.

At the same time, households and businesses are being squeezed by decades of high inflation as a result of escalating energy and food bills. The annual rate of UK inflation It rose to 11.1% in October, its highest level in 41 years.

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“I have no objection to windfall taxation if it genuinely relates to windfall profits from windfall increases in energy prices,” Hunt said in parliament on Thursday. “Any such tax should be temporary, not discourage investment and recognize the cyclical nature of energy companies,” he added.

The UK will spend an extra 150 billion pounds ($176.9 billion) on energy bills this year compared to pre-pandemic levels, according to Hunt. This is it The equivalent of paying a second NHS fee.

Thursday hunt The government also extended state support for energy bills for another 12 months to April 2024, but said average households should expect to pay £3,000 ($3,451) a year, up from the current £2,500 ($2,951).

In addition to the energy tax hike, Hunt confirmed a £700m ($824m) investment in Sizewell C, a nuclear power plant run by France’s EDF in eastern England.

The deal was first announced by former Prime Minister Boris Johnson last September and is the first country to back a nuclear project in more than 30 years.

Hunt said it would power the equivalent of 6 million homes for more than 50 years and represent the “biggest step” in Britain’s “journey towards energy independence”.

Hunt reaffirmed the UK’s commitment to reducing 68% of carbon emissions by 2030. “Last year nearly 40% of our electricity came from offshore wind, solar and other renewable sources,” he said.

He added that from April 2025, electric vehicle drivers will no longer be exempt from paying vehicle taxes.

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