Windfall taxes can hurt, Rishi – so handle with care

WINDFALL taxes sound so easy, and seem so harmless to most people that many politicians happily reach for them at the slightest excuse. Making other people pay tax is always more enjoyable than paying it yourself.

Very few people feel tender emotions towards huge corporations, especially oil companies or banks.

And in times like these, when millions are suffering from National Insurance rises, increasing council tax, swollen power prices and general inflation, the idea of creaming off large sums of money from energy giants and using it to ease the pain of ordinary people is almost impossible to resist.

So let us not forget that there are also good arguments against. What goes up must come down, and there is no telling whether the energy giants may not in future be making big losses. In that case, will they not have a strong argument for taxpayer subsidies to rescue them? If the state felt free to milk them in good times, won’t the same logic oblige governments to give them a helping hand in bad times?

Anyway, where exactly do we draw the line between large profits and actual windfall profits? Should a government which cares about business seize every opportunity to grab money from enterprises that need cash to maintain investment and sustain jobs?

In the light of this, it makes sense that Chancellor Rishi Sunak should be considering a special form of windfall tax that at least partly overcomes these problems. By sparing those companies that invest their profits in this country, strengthening our infrastructure and economy, the Government could raise money while also encouraging good business practice. Of course, it will not satisfy those on the Left whose real aim is to punish business and buy easy votes. But that is exactly why it is well worth serious consideration.