Tax on energy and aid to households: Boris Johnson resorts to social democratic recipes to leave behind the party scandal | International | The USA Print

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Nothing like feeling the noose around your neck to fuel your political instinct. And instinct, so far, Boris Johnson is left over. Britons are suffering from galloping inflation that may end at an average of 9% by 2022. The estimated annual price of energy for each home, which is reviewed twice a year by the regulator, is set to rise by almost €1,000 in October, after that it already rose more than 800 in April. The cost-of-living crisis, aggravated by the war in Ukraine and new lockdowns in China, has given Johnson the opportunity to turn the public debate on its head and try to put behind him months of agony caused by the party scandal in Downing Street.

British Chancellor of the Exchequer Rishi Sunak has made a 180-degree turn, after resisting doing so for five months. As other European countries have already decided, the Johnson government will impose a single, and therefore temporary, 25% tax on windfall profits — windfall profits, in economist jargon — of oil and gas companies. The British Treasury hopes to obtain about 5,800 million euros of income, with a tax claimed for months by the Labor opposition. Sunak rejected this option, due to the risk that it involved, according to him, of holding back the necessary investments in the platforms and deposits of the North Sea.

The announcement of the spectacular profits obtained by the British energy giants BP and Shell in the last quarter has put an end to the doubts that Sunak and Johnson himself could still have. “Like previous governments, including some conservatives, we are going to introduce a temporary tax focused on the benefits of energy,” announced the minister, with a twisted euphemism that sought to avoid the expression windfall tax (profits tax from the sky) that Labor or the press have been using for months. The opposition caucus burst into laughter at Sunak’s efforts to present the same dog with a different collar.

“It is impossible to find a more appropriate graphic illustration than this to show the way this Conservative government is so lackluster and far from reality to deal with economic problems,” Rachel Reeves, the Labor spokeswoman for the Economy, has blamed the minister. “They reach a common sense solution months late,” Reeves assured after proclaiming that the session had made clear the Labor victory in the battle of ideas.

Sunak, who presents himself as both a pragmatic and compassionate conservative and a fiscally responsible minister (reluctant to spend happily and unbalance the accounts), has announced that, in a few weeks, the Government will announce the exact percentage with which it also intends to tax to energy producing companies. They too, he explained, have benefited from extraordinary income derived from the skyrocketing price of natural gas. To offset the levies on energy companies, Sunak has announced hefty tax breaks for companies that increase their investment in extraction projects in the UK.

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Johnson, sitting in the House of Commons behind the minister, while announcing the measures, cheered each one of them, shouted encouragement and challenged the opposing party, which 24 hours earlier had burned him due to the party scandal, and the devastating report published by civil servant Sue Gray, which speaks of a culture of excessive alcohol and disrespect in Downing Street.

Sunak has announced subsidies —not loans— of up to 470 euros (in a single payment) to all households, so that they can face the skyrocketing electricity and gas bills. In addition, nearly eight million households with social assistance beneficiaries will receive another 760 euros (approximately) to face the increase in the cost of living; 350 euros for households with pensioners and 176 euros for those in which a person with a disability resides. In total, the families most in need can receive, in a single payment, about 1,200 euros.

The most neoliberal conservatives —few, given the need to win elections in such a tough economic situation— have shouted to the heavens: “These socialist measures open the door for the opposition, if it comes to government, to be authorized to raise taxes over and over again”, Sunak has been reproached by deputy Richard Drax. Without so many epithets, the main employer, CBI, used similar arguments to express its displeasure: “The tax on energy benefits is an open-ended approach, which can impose limits on electricity generation. In this way, energy security and the ambitious goals of zero carbon emissions can be damaged, ”said Rain Newton-Smith, the employer’s chief economist.

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