Government still considering windfall tax on power companies
Posted on: September 4th, 2008 by Jason Drew
Downing Street has expressed the possibility of charging windfall tax on power companies to make room for energy-saving measures for the poor consumers.
A spokesman from prime minister’s office said that talks are still underway with energy companies. All the options - inclusive of a windfall tax - are part of the discussions.
The comments have come after the Liberal Democrat leader Nick Clegg’s accusation that energy companies are “blackmailing” the government. Apparently, the power companies are reluctant to provide funds for the energy-saving schemes proposed by the government.
According to Clegg, without government’s intervention, the coming winter could spell “disastrous” for customers who are not in a position to pay their energy bills.
The UK government is currently working on new ways to help householders who have been hit by rising energy costs. The new measures are likely to be announced very soon. The government has been trying hard to convince energy companies for their voluntary contribution towards some schemes. One such scheme allows a £100 rebate towards poorer customers. The energy companies have reportedly shown reluctance to the government’s proposal.
If no amicable solution is found, the government may have to resort to a windfall tax. This option is being supported by many Labour party backbenchers. But the government has to contend with the fact if it goes ahead with this option, the power companies may just offset the extra burden on them by raising prices.
On their part, the power companies have called it a wrong way of addressing the problem of high energy costs through short-term measures.
