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Rishi did a great job in setting the terms
Of the windfall tax then
https://www.newhamrecorder.co.uk/new...osses-confirm/
seems ok to me. As Az will tell you, one of the purposes of the tax system is to reward or punish behaviours. The UK has to improve it productivity and you do that from investment. The current tax system is favourable towards investment so this is very much a good thing.
Doesn't make a lot of sense to me. A windfall tax that the government were virtually forced into, to help plug the black hole in the finances, and Shell haven't paid a penny.Originally Posted by DryCleaning
I get that investment is good, but to have paid zero extra tax doesn't seem right.
So if all profits are reinvested, what is there to be taxed?
Precisely, maybe they could have led with a cap on what could be reinvested, as with the model they've gone with, Shell have paid nothing.
I'm not saying I have the answer, but surely a windfall tax that raises absolutely nothing from one of the main contributors is flawed.
The whole argument against windfall taxes is that in practice you don't actually see the sums you want because companies will find one way or other to limit it.
In this case though, I agree, it's pointless. I guess the UK economy hopefully saw investment it otherwise wouldn't have but still. The point was to help pay for the support packages.
this thread shows that the general public are just not aware of how petrochems are taxed in the UK. They already pay an effective rate of around 60% corporation rate on their UK profits - this is before the windfall. Most other companies only pay 19%.
The UK has had a productivity puzzle for many years, and economists will tell you that investment is one way to drive up growth by improving productivity. In this respect successive governments have used the tax system to encourage investment rather than distribute as profits. It seems to be that if Shell are reinvesting profits rather than paying tax and distributions, these funds are being spent directly into the UK economy, increasing the velocity of money, and improving the economy in a way that just wouldn't happen if the profits were taxed and spent via the public sector.
Drycleaning would you have a link / evidence where they pay 60% corporation tax in the UK ?
If true didn't know that
If that’s correct then It’s news to me that they pay 60% before the windfall tax yes. It doesn’t change what I was asking though, ie whether a tax that’s intended to fund energy relief that gets nothing from Shell is badly thought out
I have no real problem with this so long as
- the investment is in something that is a priority for the UK, or at very least isn't at odds with our priorities
- jobs created by the investment predominantly go to people from the UK and are new.
If the above two criteria aren't met then the investment has very little benefit to the UK.
For relief to be allowable, it has to be UK investment in green energy
That may well be a sound economic argument but of course there are other dimensions to this issue too, particularly political and sociological ones.
The attempt to stimulate investment and growth in "normal" times is laudable. However with the effects of the Ukraine war and raging inflation generally we are not living in "normal" times and therefore it can be argued that unusual solutions need to be deployed.
With the price of fuel being so high and Joe Public seeing energy companies making excessively high profits people quite rightly will see a direct correlation and think it unfair. By all means reinstitute the investment tax advantages when we return to more manageable energy costs but in times of crisis like right now I don't think it unreasonable to redistribute the energy profits directly to the most needy.
energy companies (the businesses you and I buy our energy from) are not making excessive profits. This is another myth. The energy retailers are pretty much struggling, with so many going to the wall in the past couple of years.
The excessive profits are being made by the wholesalers - those who get the dead trees out of the ground and sell it to the energy companies.
a few weeks ago people on here were complaining that pension funds were suffering due to Liz Truss's (ahem) management of the economy. Now here we are complaining that the same pension funds (the main owners of the shares in the petrochems) are benefiting.
What do we want - good pension funds or funds that tank? make your mind up and then apply it consistently.
read up on the ring fenced charge and supplementary charge (start here)
Brought in by Osborne way back when.
RFCT = 30%
supplementary charge = 10%
windfall = 25%
Total 65%
my mistake, its 65% and not 60%
A few points of point of order on this thread.
Shell today announced it has paid ZERO windfall taxes in the UK in 2022. Thus its effective windfall tax rate is ZERO not 25%.
I am willing to have small bet with anyone that all the large energy suppliers (not resellers) increase dividends/engage in share buybacks in the next 2 years. That is not about increasing investment, it's about rewarding their owners. Come on Feedy, 'fess up - these guys are raking it in at the moment. I'm not hearing about a massive wave of investment.
The UK does have a staggering labour productivity problem and it's mostly related to chronic underinvestment. Jimbo won't like this (because it's a fundamental issue associated with Brexit) but UK firms are captured by a pervasive fear of the future in part related to the uncertainties around leaving the single market. I think a lot of sensible pro-Brexit advocates are beginning to realize what an unmitigated disaster for the UK Brexit was. Even Daniel Hannan (the arch Brexiteer) has started mooting the idea of rejoining the single market.
Hark ... here comes Philomena Wales now with some bollocks around "name a country that's identical to the UK apart from not being in the single market" to use for a simpleton's comparison.
Forget all this day job stuff anyway. We had better put up a decent show tomorrow - I've flown over for it.
Couple of points:
The tax rate is 65%. Companies don't choose their tax rate, it's fixed by law
Taxable profits may be zero, but this is down to the investment relief given. And share buybacks aren't tax free - their are anti avoidance rules in place. HMRC treat as income unless there is a valid commercial reason such as a restructure.
Agree with the rest.
Ah, you said "They already pay an effective rate of around 60% corporation rate on their UK profits - this is before the windfall."
so they don't they pay 40% before the windfall (which shell aren't paying anyway)
Yeah my bad, I was rushing
That'll teach me for not reading before submitting
I was starting to feel sorry for these poor oil and gas people getting a windfall tax on top of 60% tax
Forget about me this weekend mate, just make sure you have a lovely time and enjoy the football.
"Football" and "lovely time" are words that are not synonyms in my mind. I get more fun about ribbing the old gits who sit around me in the stand for living on plague island.Forget about me this weekend mate, just make sure you have a lovely time and enjoy the football.
Jimbo
What would it take for you to accept that Brexit was a bad idea?
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