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Jacob Rees-Mogg warns against raiding ‘honey pot’ with oil and gas windfall tax

Minister for Brexit Opportunities Jacob Rees-Mogg arrives to attend a regional cabinet meeting at Middleport Pottery in Stoke-on-Trent. Picture date: Thursday May 12, 2022 (Oli Scarff/PA)
Minister for Brexit Opportunities Jacob Rees-Mogg arrives to attend a regional cabinet meeting at Middleport Pottery in Stoke-on-Trent. Picture date: Thursday May 12, 2022 (Oli Scarff/PA)

Jacob Rees-Mogg argued it is wrong to raid the “honey pot of business” to fund measures to ease the cost-of-living crisis by imposing a windfall tax on oil and gas giants.

The Brexit opportunities minister argued that the one-off measure on the companies’ soaring profits potentially to reduce consumer bills would ultimately see the public pay more tax.

Boris Johnson has not ruled out the move, instead urging firms to invest their soaring profits, and Downing Street hinted that a decision would be coming “soon”.

Labour leader Sir Keir Starmer argues a U-turn on opposition is “inevitable” as the tax on North Sea firms would “raise billions of pounds, cutting energy bills across the country”.

But Mr Rees-Mogg told reporters: “Retrospective taxation is difficult because you are changing the understanding of what people do when they invest.

“It’s difficult because tax on corporations ultimately falls on individuals anyway, it either falls on individuals because the companies to maintain their net margin around the world increase their pricing in the UK.

“Or it falls on individuals because the profit doesn’t fall through to the dividends that fund their pensions.

“So I think the idea of a windfall tax as a panacea to the inflation problem is wrong.”

Pressed if he would say never to such a tax, Mr Rees-Mogg said: “I’m not commenting on what the Chancellor will do, that’s a matter for him and his budget.

“I’m merely saying there is this honey pot of business you can just raid whenever you feel like is not true.”

Mr Rees-Mogg, who also holds the brief of government efficiency minister, added: “All taxation ultimately falls on individuals so when you’re calling for a windfall tax you’re saying you want to pay more tax.”

The idea of a windfall tax has gained popularity because energy firms are seeing soaring profits because of rising consumer prices, as fuelled by the pandemic and the war in Ukraine.

Chancellor Rishi Sunak has not ruled out imposing the measure, and has said “no option is off the table” if companies do not increase their investment “soon”.

Downing Street said on Friday that ministers “haven’t put a timeline” on when firms must change their profits into spending, but reiterated a decision would come “soon”.

Labour has argued that 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 argued the tax would put investment and jobs at risk.