Inflation in the UK is at its highest level in 40 years. While households are primarily burdened by the increased energy prices, the oil companies are posting additional billions in profits. The British government now wants to redistribute part of it.
The British government wants to mitigate the consequences of inflation for the population with a support package of 15 billion pounds (17.6 billion euros). Finance Minister Rishi Sunak said when the plans were presented that people would have to be supported "who take too many risks". A third of the aid measures are to be financed by a tax on additional profits from oil companies.
According to the Treasury, "around one in eight of the most vulnerable households" will receive at least £1,200. These are said to include a one-off payment of £650, a £400 increase in Universal Credit and a doubling of rebates on utility bills by October.
According to the Ministry of Finance, the tax for corporations such as BP and Shell on the additional profits from the sharp rise in oil and gas prices should bring in around five billion pounds, with a further ten billion being contributed by the government. The oil and gas companies should pay 25 percent tax on the additional profits. According to the ministry, however, there should be the possibility of deducting 80 percent of these expenses from taxes in order to promote investments in the energy sector.
The excess profits tax is "temporary" and will "phase out when oil and gas prices return to more historically normal levels." The introduction of such a tax is a notable shift in direction by the Conservative government of Prime Minister Boris Johnson. He had previously rejected it on the grounds that it would make it more difficult for oil companies to invest in climate-friendly energy production.
Sunak, on the other hand, has now declared before the British House of Commons that it is possible "to tax both additional profits fairly and to create incentives for investments". Inflation in Great Britain had previously risen to nine percent compared to the same month last year, the highest level in 40 years. According to UK energy agency Ofgem, annual energy bills could rise by £800 per household by October.
In Germany, where inflation rose to 7.4 percent in April, the Bundestag and Bundesrat passed a series of relief measures last week to mitigate the effects of inflation on citizens. In addition to a fuel discount, this also includes a one-time payment for Hartz IV recipients of 200 euros, an immediate surcharge for children in low-income households of more than 20 euros per month and a one-off child bonus of 100 euros per child for all families. The federal government has so far rejected a so-called excess profit tax on the sharply increased income of energy companies.
