Two Cabinet ministers have voiced their objections to imposing a windfall tax on oil and gas firms to address the cost-of-living crisis.
Prime Minister Boris Johnson has come under pressure to introduce a one-off levy on firms which have benefited from globally high oil and gas prices and use the revenue to fund measures to ease the cost-of-living crisis on households struggling with rising bills.
“It puts off investment both in that sector and, absolutely, the risk in others,” he told the Telegraph.
“So we’d be very, very wary of a windfall tax. What we want to see is companies using the money they’ve got to invest, particularly in that industry.”
Health Secretary Sajid Javid also weighed in, saying he is “instinctively” opposed to imposing the levy.
Addressing the Welsh Conservative conference on Saturday, Mr Javid said: “You just mentioned the windfall tax idea. Instinctively I don’t like it. I just think we’ve got to be really careful.
“As a country, we have a very hard-won but strong reputation on being pro-business, welcoming investment.
“Businesses like certainty and of course there’s no such thing as pure certainty, but when it comes to taxes, I think we’ve just got to be really careful with these sudden taxes that could have an impact in the long term that we would come to regret.”
Mr Johnson has said he cannot “magic away” all the soaring food and energy expenses, instead vowing on Friday to use the “firepower” of Government to “put our arms around people” as it did during the coronavirus pandemic.
Jacob Rees-Mogg, meanwhile, has also mounted opposition from within the Cabinet as he argued it is wrong to raid the “honey pot of business”.
The Brexit opportunities minister said the one-off measure on North Sea firms would ultimately see the public pay more tax.
Mr Johnson has not ruled out the move, instead urging firms to invest their soaring profits, and Downing Street hinted a decision would be coming “soon”.
Labour leader Sir Keir Starmer argues a Government U-turn on opposition to a windfall tax is “inevitable” as it would “raise billions of pounds, cutting energy bills across the country”.
The idea of a windfall tax has gained popularity because energy firms are seeing soaring profits due to rising consumer prices, as fuelled by the pandemic and the war in Ukraine.
Labour has argued a windfall tax could fund a VAT cut on energy bills and an increase in the warm home discount for those on a low income.
Offshore Energies UK, the energy industry’s trade body, has said the tax would put investment and jobs at risk.