Major calls for windfall tax on energy profits

[Tangled up in Blue]

http://www.bbc.co.uk/news/uk-politics-24621391

Not often you hear a former Tory PM talking sense.

 

[MK Shrimper]

Something needs to happen - the energy companies are out of control. All very well for some Tory mouthpiece to talk about switching - but to who? It's a virtual monopoly.

 

[Tangled up in Blue]

Something needs to happen - the energy companies are out of control. All very well for some Tory mouthpiece to talk about switching - but to who? It's a virtual monopoly.

3 out of the 6 energy companies concerned have already announced price rises for this winter.Won't be anyone to switch too soon.

 

[Neil_F]

http://www.bbc.co.uk/news/uk-politics-24621391

Not often you hear a former Tory PM talking sense.

Out of interest, who do you think will bear the cost of such a windfall tax?

 

[Tangled up in Blue]

Out of interest, who do you think will bear the cost of such a windfall tax?

The energy companies.QED.

There are precedents for this you know (by both Labour and the Tories). :-

"PAST WINDFALL TAXES

2009: Labour tax on bankers' bonuses
1997: Labour levy on the profits of energy giants and other formerly state-owned firms privatised since the 1980s
1981: Conservative tax on oil and bank profits."

 

[Neil_F]

A company is a piece of paper. Costs have to borne by people and you have a choice of three: shareholders, customers and employees.

 

[londonblue]

A company is a piece of paper. Costs have to borne by people and you have a choice of three: shareholders, customers and employees.

How is a tax borne by the shareholders? Are you suggesting that the companies will reduce their dividends? I bet they don't because it would send a negative message to the market.

 

[Neil_F]

How is a tax borne by the shareholders? Are you suggesting that the companies will reduce their dividends? I bet they don't because it would send a negative message to the market.

This is precisely the point I am getting at. Costs to a business can only be borne in three ways:

1. By shareholders in the form of reduced returns.
2. By employees in terms of lower wages.
3. customers through higher prices.

One of those three has to bear the cost and all have consequences.

 

[Tangled up in Blue]

This is precisely the point I am getting at. Costs to a business can only be borne in three ways:

1. By shareholders in the form of reduced returns.
2. By employees in terms of lower wages.
3. customers through higher prices.

One of those three has to bear the cost and all have consequences.

You asked me a question earlier,which I answered.

Now I have a question for you.

Do you think the recent price hikes by UK energy companies are a) justified? or b)unjustified?

If you're opting for a) please explain why.

If B, then please explain how these excessive profits can and should best be recouped by the British taxpayer.

 

[londonblue]

You asked me a question earlier,which I answered.

Now I have a question for you.

Do you think the recent price hikes by UK energy companies are a) justified? or b)unjustified?

If you're opting for a) please explain why.

If B, then please explain how these excessive profits can and should best be recouped by the British paxpayer.

Based on this:

BBC

You'd have to say they're unjustified.

 

[superblue24]

You asked me a question earlier,which I answered.

Now I have a question for you.

Do you think the recent price hikes by UK energy companies are a) justified? or b)unjustified?

If you're opting for a) please explain why.

If B, then please explain how these excessive profits can and should best be recouped by the British paxpayer.

What is a "paxpayer"?

 

[Neil_F]

You asked me a question earlier,which I answered.

Now I have a question for you.

Do you think the recent price hikes by UK energy companies are a) justified? or b)unjustified?

If you're opting for a) please explain why.

If B, then please explain how these excessive profits can and should best be recouped by the British paxpayer.

You gave me an answer, yes....

Are the price rises justified? I have absolutely no idea. I don't know enough about the business and I don't like to peddle easy answers to things I don't understand.

I'm interested by the use of the term "excessive profit". How much profit is excessive? Is there a defining point in absolute or relative terms?

I'm also interested by your use of the phrase, "recouped by the British taxpayer." I don't understand how it is the taxpayer's money to recoup. Consumers have paid for a service but a windfall tax isn't recovering the money and returning it to the consumer, it will just hit the Treasury accounts.

The government have a number of options if they want to make a long-term difference to energy prices, which won't be achieved by either a price freeze or a windfall tax. They can increase competition in the market, they can reduce the burden of regulation and specifically the green levies that add some 10% to bills, or they can increase the supply of gas by granting and expediting drilling permits. All of these options have costs as well, mainly environmental.

My objection at the moment is that there is a false debate about what is actually happening. Governments (this one and the last one) have designed a system where fossil fuel prices are supposed to rise so that renewable energy is a more attractive financial proposition. The assumptions for renewables is that gas prices will rise to 80p / btu. Government is therefore reluctant to take any action that would reduce gas wholesale prices and both Ed Miliband (as the former Secretary of State) and Ed Davey have said as much.

Politicians have engineered a scenario whereby energy is expensive. Politicians are now complaining that energy is too expensive but are unprepared to say why or what the environmental cost would be of reversing their policy decisions.

 

[Yorkshire Blue]

You gave me an answer, yes....

Are the price rises justified? I have absolutely no idea. I don't know enough about the business and I don't like to peddle easy answers to things I don't understand.

I'm interested by the use of the term "excessive profit". How much profit is excessive? Is there a defining point in absolute or relative terms?

I'm also interested by your use of the phrase, "recouped by the British taxpayer." I don't understand how it is the taxpayer's money to recoup. Consumers have paid for a service but a windfall tax isn't recovering the money and returning it to the consumer, it will just hit the Treasury accounts.

The government have a number of options if they want to make a long-term difference to energy prices, which won't be achieved by either a price freeze or a windfall tax. They can increase competition in the market, they can reduce the burden of regulation and specifically the green levies that add some 10% to bills, or they can increase the supply of gas by granting and expediting drilling permits. All of these options have costs as well, mainly environmental.

My objection at the moment is that there is a false debate about what is actually happening. Governments (this one and the last one) have designed a system where fossil fuel prices are supposed to rise so that renewable energy is a more attractive financial proposition. The assumptions for renewables is that gas prices will rise to 80p / btu. Government is therefore reluctant to take any action that would reduce gas wholesale prices and both Ed Miliband (as the former Secretary of State) and Ed Davey have said as much.

Politicians have engineered a scenario whereby energy is expensive. Politicians are now complaining that energy is too expensive but are unprepared to say why or what the environmental cost would be of reversing their policy decisions.

Neil - how would they increase competition?

 

[Jam_Man]

Cant see why taxing the engergy companies will make my fuel bills go down.

What annoys me is they reduce prices in the sprint and make a big song and dance about it and then wack them back up in Autumn when people actually need to use it.

 

[Neil_F]

Neil - how would they increase competition?

It would be very difficult. New entrants are unlikely in a market dominated by 6 massive firms in a business where economies of scale has a big impact.

I suppose the best option would be to take a lead from Theodore Roosevelt and do to the big 6 what he did to Standard Oil: break them up. If they were split into a medium 12 it would be easier to introduce new entrants.

 

[Tangled up in Blue]

What is a "paxpayer"?

Typo for taxpayer.Was in a hurry to write that post before I nipped out to do some company classes this pm.Sorry.:raspberry:

 

[OldBlueLady]

John Major is one of the most under-rated PMs of all time. Always did speak sense, suffered from being in the shadow of Lady T. Good man, let's hope the boy, David, listens and learns.

 

[Another Surrey Shrimper]

So in conclusion the enforced price freeze that some were slating a week or two seems like the better option. This windfall tax doesn't benefit the consumer and to do nothing and allowing the market to regulate itself clearly isn't working.

 

[applelover]

Anyone who isn't a raving ideological lunatic, who doesn't know the price of a pint of milk, knows that we need to get a hold of this situation. I'd prefer that it was done without nationalisation so the other options include forcing the big companies to split up into smaller firms, price freezes or windfall taxes. Whatever you do don't let ridiculous philosophical positions stop you from acknowledging and dealing with the issue.

 

[Benfleet A1]

Anyone who isn't a raving ideological lunatic, who doesn't know the price of a pint of milk, knows that we need to get a hold of this situation. I'd prefer that it was done without nationalisation so the other options include forcing the big companies to split up into smaller firms, price freezes or windfall taxes. Whatever you do don't let ridiculous philosophical positions stop you from acknowledging and dealing with the issue.

While we are here, how much is a pint of milk? Quickly now, no googleing.