I’m not sure if my new found readership are aware of my other activities on Barkingside 21 so I am reproducing a post here.
"The government is considering imposing a windfall tax on energy companies amid public anger at record increases in fuel costs." So says the BBC. It goes on to say: "The cash generated would be used to help poorer families who will struggle to pay their bills this winter."
Now, hold on just a minute here. These companies aren’t putting up their prices just for fun. They are in a competitive marketplace. Consumers will switch to cheaper providers if there are any. But there aren’t. And why? Because demand is pushing up the price of the raw materials – Oil, Natural Gas, Coal and Uranium.
True these companies make large profits and they are rising, but are they any higher than they otherwise would have been had this scenario not unfolded? Probably not, and nobody would be kicking up a fuss.
Now, the next question is who pays this windfall tax? If an extra burden is placed upon these companies, what are they going to do? Yup, you guessed it, they are going to pass the costs onto their customers – the very people the government are supposedly concerned about.
Now we come to the really cynical sleight of hand, Paul Daniels would be proud of them. The Government tax Energy consumption by placing VAT on it at a percentage rate. So, if the price goes up, but company profits remain stable, who is getting the resultant windfall. Yup, its The Treasury. If prices double, the amount collected in VAT also doubles.
The government are ALREADY getting a windfall in tax, and it’s you and me who are paying it. But not satisfied with that they want to raid our pockets further by an indirect attack on the companies who supply us with these products. It is the consumer who ultimately pays those companies tax bills.
Now, hold on just a minute here. These companies aren’t putting up their prices just for fun. They are in a competitive marketplace. Consumers will switch to cheaper providers if there are any. But there aren’t. And why? Because demand is pushing up the price of the raw materials – Oil, Natural Gas, Coal and Uranium.
True these companies make large profits and they are rising, but are they any higher than they otherwise would have been had this scenario not unfolded? Probably not, and nobody would be kicking up a fuss.
Now, the next question is who pays this windfall tax? If an extra burden is placed upon these companies, what are they going to do? Yup, you guessed it, they are going to pass the costs onto their customers – the very people the government are supposedly concerned about.
Now we come to the really cynical sleight of hand, Paul Daniels would be proud of them. The Government tax Energy consumption by placing VAT on it at a percentage rate. So, if the price goes up, but company profits remain stable, who is getting the resultant windfall. Yup, its The Treasury. If prices double, the amount collected in VAT also doubles.
The government are ALREADY getting a windfall in tax, and it’s you and me who are paying it. But not satisfied with that they want to raid our pockets further by an indirect attack on the companies who supply us with these products. It is the consumer who ultimately pays those companies tax bills.
If they are really concerned about the elderly and vulnerable, they could always use the money they’ve already filched from us to assist those people with fuel efficiency measures and insulation. Do they? Nope!
Hi Weggis. That's a damn good point about fuel VAT. I agree, windfall taxes are a stupid idea, but hey - it makes the politicians look like they are DOING something, make tough choices, blah blah blah...
ReplyDeleteOh yes indeedy, and with the added value of boosting welfare dependency and the client state, just like NuLab's wonderfully efficent Tax Credits system.
ReplyDelete