Azara Blog: Labour wants a stealth tax on energy companies

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Date published: 2008/03/08

The Financial Times says:

Energy suppliers are under pressure from the Treasury to accept a levy to help people having trouble with fuel bills and fear the imposition of a windfall tax if agreement cannot be reached.

The levy, which Treasury officials described as "voluntary", would amount to a windfall tax in all but name, an industry source said. Government insiders say an industry contribution of between £100m-£200m is being discussed.

Negotiations are set to continue over the weekend, but the companies believe they are being pushed into signing up for an initiative that Alistair Darling, the chancellor, could announce in the Budget next Wednesday. They believe that if they do not comply with the Treasury plan, the government could impose a windfall tax, which could be even more onerous.

The measures could help pensioners and people using pre-payment meters. One proposal put by officials was for a £60 payment to everyone aged 70 or over.

However, the plan has been criticised by industry executives and fuel poverty campaigners, because it would not give direct help to those most in need.

So we have a government which believes that blackmail is the way we should deal with fiscal matters, just so that they can claim they are not raising taxes when of course they are. All very typical New Labour.

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