Conservative leadership frontrunner Liz Truss has ruled out a further windfall tax on energy companies, and hit out at those she believes are "bashing business".
Yesterday, outgoing PM Boris Johnson and Chancellor Nadhim Zahawi chaired a meeting with electricity generators amid suggestions the Energy Profits Levy could be extended.
Aberdeen & Grampian Chamber of Commerce (AGCC) has written to the UK Government seeking an assurance that any extension does not include a second raid on North Sea operators who are now paying tax at 65%, which is more than three-times higher than the standard rate of corporation tax.
As a new forecast predicted that annual energy bills could soar to more than £5,000 next April, the government is under increasing pressure to step in and ease the cost of living crisis.
However, research by the Chamber shows that the government has banked £18.2billion extra this year in VAT, fuel duty and North Sea tax receipts, demonstrating that there is clearly already sufficient incremental tax revenues to fund support to consumers and businesses.
'Double whammy windfall won't work'
Writing to Mr Zahawi, AGCC Chief Executive Russell Borthwick said: "We are fully supportive of measures to support consumers and businesses through this unprecedented crisis, and welcome the fact you are looking to act.
"However, we are alarmed at the suggestion that the energy sector – one of enormous importance to our regional economy – is again being singled out, despite already contributing £22million per day in taxes.
"The cost-of-living crisis and high energy prices have both driven significant additional revenue to the exchequer. In fact, it is fair to say that the Treasury has been one of the biggest beneficiaries.
"Analysis of your tax receipt data suggests that between VAT, fuel duties and North Sea tax receipts, your government has already received £18.2billion more
this year than it did last year – and that is before the additional £5billion your original windfall tax will generate is taken into account.
"It would be helpful to know how much of the additional monies raised this year has been used to tackle the current crisis?"
Back renewable investment
Mr Borthwick added: "The definition of insanity is doing the same thing over and over again and expecting different results. The windfall tax has not stopped energy bills rising. A double whammy windfall won’t either.
"Instead, we need to invest in the energy transition to secure a net zero future with abundant and secure domestic green energy supplies.
"That’s why failing to include renewables in the Investment Allowance was a missed opportunity and we want to see it expanded to include investment in technologies such as offshore wind, hydrogen, carbon capture and storage and direct air capture – all of which are currently being developed here in the North-east of Scotland.
"We need to deliver the reindustrialisation of Scotland to make sure we capitalise on our green energy potential. We can only do that with a fiscal environment that gives confidence to investors."
Truss states dislike of windfall taxes
Meanwhile, last night Liz Truss rejected calls to increase the windfall tax on energy companies to fund cost of living handouts for households, saying profit is not a “dirty word”.
The Foreign Secretary said she was “absolutely” against such taxes, arguing that such a policy approach would be taken by Labour.
The remarks are her clearest yet on the subject and come despite the Treasury devising an expansion of the windfall tax as an option for the next prime minister.
Speaking at The Telegraph’s Tory leadership hustings in Cheltenham, she said: “I don’t think profit is a dirty word, and the fact it’s become a dirty word in our society is a massive problem.
“One thing I absolutely don’t support is a windfall tax. I think it’s a Labour idea, it’s all about bashing business, and it sends the wrong message to international investors and to the public.”
Ms Truss also said she would lift the ban on fracking.