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Actually, in a way it does. The idea that the reason the government's plan required borrowing so much money was because they'd refused to impose a proper windfa

by makomk 4y ago

Actually, in a way it does. The idea that the reason the government's plan required borrowing so much money was because they'd refused to impose a proper windfall tax was a lie by the opposition Labour party (that was repeated unchallenged by most of the media, including the BBC): https://www.channel4.com/news/factcheck/factcheck-labour-keeps-repeating-misleading-claim-on-energy-windfall-tax https://www.channel4.com/news/factcheck/factcheck-labour-kee... There's just not enough money there. The actual reason that Labour's plan could be mostly funded from windfall taxes was much more cynical: it ended in April back when energy prices were expected to be even higher then, whilst the government plan extended for two years and cost substantially more as a result. It couldn't just be extended for longer either because a huge chunk of the money came from backdating windfall taxes as far as possible. This worked for Labour because the media was willing to ignore what this would actually mean for consumers - something they didn't do when the Government inevitably caved and did the same thing themselves. Of course, now that April is coming Rachel Reeves and other Labour politicians are claiming that the reason energy prices are going up is because the Tories refused to impose proper windfall taxes and of course Labour would keep the cap past then, and the BBC and others are repeating that claim unchallenged too.

ndsipa_pomu 4y ago
The issue is more likely to do with the investment "loophole" > Companies can reduce their payments if they invest capital in new production in the North Sea – covering everything from hiring vessels and rigs to engineering contracts. https://www.theguardian.com/business/2023/feb/02/why-is-shells-uk-windfall-tax-payment-so-low https://www.theguardian.com/business/2023/feb/02/why-is-shel... I don't know why you're going on about Labour - how are they relevant?
- makomk 4y ago
  The whole idea that this could all have been funded from a windfall tax pretty much came from Labour, which is how they're relevant. Also, the fact check I linked to specifically addressed the "investment loophole" - closing it's not even close to enough money. The claim that the price cap could be funded from windfall taxes really, heavily relied on Labour playing sneaky tricks with ending their proposed price cap in April and the media not calling them out on it (along with other dodgy accounting tricks, and more recently them pointing to Shell's global profits as proof the existing windfall tax isn't aggressive enough even though they only proposed to tax UK profits).
  - tankenmate 4y ago
    This is nothing to do with Labour; they haven't been in government for well over a decade. The first UK windfall tax targeted on oil companies was in 1983 under Thatcher / Lord Lawson; so the party that recommends it depends more on what oil prices are doing rather than whether there is a left or right government in power. Whether it will or won't cover all the costs doesn't really matter either, because everyone knows what the quality of economic forecasts are variable at best; you can't control an economy (no matter how much some Communist governments tried), but you can influence it with taxes / subsidies. What matters is the benefits and costs. The main issue is that the UK economy is suffering under supply side inflation, and the usual tricks don't really work too well. The BoE have to be careful as during stagflation rate changes have larger than normal impacts; far more of a tightrope that usual. The UK has several supply side issues beyond other countries; no natural gas reserves (they were sold by the Tories / Osborne), and Brexit. And so the UK is in a tighter strait jacket; and the current results / forecasts for the GDP reflect that.
tankenmate 4y ago
The UK business as a whole doesn't invest enough in capital goods (capital investment); compare UK's 18% of GDP to Germany 23%, France & Ireland 24%, even America with it's investment downturn in 2021 of 21%. And it's little wonder that the UK's productivity per capita is down. This drop in investment leads to a drop in output which leads to a drop in tax revenue which leads to a drop in the currency (external/forex, internal/inflation). Brexit certainly hasn't helped at all on the investment front (either internal or FDI); plenty of UK businesses are investing in a presence in the EU so they can keep selling to EU customers (which leads to EU employment and EU taxes). But cuts in services for the working class leads to a less productive working class (on top of the productivity hit from reduced capital investment), and real terms wage cuts leads to a real terms tax revenue cut as well (ceteris paribus; which it rarely is, the Tories want to tax the rich less which makes even less sense, the beatings will continue until morale improves!). Stagflation is hard enough to navigate through without wearing ideological blinkers.

by makomk 4y ago

ndsipa_pomu 4y ago

The issue is more likely to do with the investment "loophole" > Companies can reduce their payments if they invest capital in new production in the North Sea – covering everything from hiring vessels and rigs to engineering contracts. https://www.theguardian.com/business/2023/feb/02/why-is-shells-uk-windfall-tax-payment-so-low https://www.theguardian.com/business/2023/feb/02/why-is-shel... I don't know why you're going on about Labour - how are they relevant?

makomk 4y ago
The whole idea that this could all have been funded from a windfall tax pretty much came from Labour, which is how they're relevant. Also, the fact check I linked to specifically addressed the "investment loophole" - closing it's not even close to enough money. The claim that the price cap could be funded from windfall taxes really, heavily relied on Labour playing sneaky tricks with ending their proposed price cap in April and the media not calling them out on it (along with other dodgy accounting tricks, and more recently them pointing to Shell's global profits as proof the existing windfall tax isn't aggressive enough even though they only proposed to tax UK profits).
- tankenmate 4y ago
  This is nothing to do with Labour; they haven't been in government for well over a decade. The first UK windfall tax targeted on oil companies was in 1983 under Thatcher / Lord Lawson; so the party that recommends it depends more on what oil prices are doing rather than whether there is a left or right government in power. Whether it will or won't cover all the costs doesn't really matter either, because everyone knows what the quality of economic forecasts are variable at best; you can't control an economy (no matter how much some Communist governments tried), but you can influence it with taxes / subsidies. What matters is the benefits and costs. The main issue is that the UK economy is suffering under supply side inflation, and the usual tricks don't really work too well. The BoE have to be careful as during stagflation rate changes have larger than normal impacts; far more of a tightrope that usual. The UK has several supply side issues beyond other countries; no natural gas reserves (they were sold by the Tories / Osborne), and Brexit. And so the UK is in a tighter strait jacket; and the current results / forecasts for the GDP reflect that.

tankenmate 4y ago

The UK business as a whole doesn't invest enough in capital goods (capital investment); compare UK's 18% of GDP to Germany 23%, France & Ireland 24%, even America with it's investment downturn in 2021 of 21%. And it's little wonder that the UK's productivity per capita is down. This drop in investment leads to a drop in output which leads to a drop in tax revenue which leads to a drop in the currency (external/forex, internal/inflation). Brexit certainly hasn't helped at all on the investment front (either internal or FDI); plenty of UK businesses are investing in a presence in the EU so they can keep selling to EU customers (which leads to EU employment and EU taxes). But cuts in services for the working class leads to a less productive working class (on top of the productivity hit from reduced capital investment), and real terms wage cuts leads to a real terms tax revenue cut as well (ceteris paribus; which it rarely is, the Tories want to tax the rich less which makes even less sense, the beatings will continue until morale improves!). Stagflation is hard enough to navigate through without wearing ideological blinkers.