On the BBC, Radio 4’s Any Questions program on Friday evening Lord Hattersley advocated a windfall tax on the oil companies.
The British government is already receiving a windfall from the increase in oil prices. Firstly through the increased prices at the pump and secondly through the sale of North Sea oil. I think it was the BBC who reported recently that oil is the biggest contributor to the British exchequer.
It’s worth noting that Gordon Brown has been hectoring the oil companies to invest more money in extracting oil from the North Sea.
When demand for a resource or commodity is greater than supply the price goes up. This enables companies to invest more and new companies find it worthwhile to get into the market. This helps adjust the disparity between supply and demand and bring prices down. By double taxing profits the government will restrict the ability of oil companies to invest. This is basic economics.
New Labour portray themselves as business literate but clearly they don’t really understand how free market capitalism works.
It’s also interesting that Lord Hattersley raised the question of pensions in regard to oil tax. I have Shell shares in an ISA which I intend to be my pension. Most people will have Shell or BP in their pensions funds. Double taxing oil companies will reduce the value of the pensions of millions of people.
The government are already receiving far too much money from oil and a windfall tax will only do harm to millions of people’s pensions.
If they are really concerned about pensioners why don’t they take some of the extra money they are already receiving from oil and give it back.