Liz Truss is against an energy windfall tax - but we already have one

Liz Truss speaking at PMQs.
The new PM insisted she is still against a windfall tax in PMQs on Wednesday. Credit: Commons

Yesterday, Liz Truss did an unusual thing for Prime Minister's Questions (PMQs) - she actually answered a question.

Asked is she against windfall taxes, she said: “Yes I am against a windfall tax".

But, here's the thing, we have a windfall tax.

Remember, Rishi Sunak put one in place in May, - an “energy profits levy” - that was actually quite a bit bigger than the first windfall tax suggested by Labour - 25%.

And it runs until oil and gas prices return to normal levels or to December 2025.

On Wednesday, the government confirmed that the energy profits levy (aka windfall tax) was remaining in place.

So, when Truss says she’s against a windfall tax, she’s actually against an additional or extended windfall tax. Her government has a tax in place.

Now I’m not saying Labour’s proposal is the same. It is different and it doesn’t have the investment incentive - that cuts the tax pound by pound as companies invest in the UK - but there is interesting politics on both sides here.

In a way, Sunak gave in to a windfall tax not because it was going to fund this winter’s package (he still had to borrow a fair bit) but because there was massive political pressure. All focus groups show a windfall tax is hugely popular.

So, it’s interesting to see Truss shout loudly about not having a windfall tax when there is one in place.

Now, obviously the current one won’t come close to covering today’s announcement but neither would Labour’s now much bigger windfall tax. So the politics of it show a much bigger divide on rhetoric.

Truss wants to be very clear that she won’t use additional taxes - even when they are in place.

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