Levy lite: Windfall tax could have raised £6 billion more

The Liberal Democrats have branded Rishi Sunak's windfall tax as a "levy lite," after analysis shows it could have raised more than double the amount if it was tougher and implemented earlier.

The Liberal Democrats were the first party to propose a windfall tax last October. Under the party's plans for a tougher windfall tax, a total of £11 billion would have been raised, including cash that could have helped families through last winter.

That compares to just £5 billion being raised under Rishi Sunak's proposed levy. This is equivalent to each UK household losing out on over £200 because the Chancellor's windfall tax was too weak and too late.

Responding to Rishi Sunak's u-turn on taxing oil and gas companies, Liberal Democrat Treasury spokesperson Christine Jardine MP said:

"This is more a levy lite than a windfall tax. The Chancellor could have raised double the cash from oil and gas companies if he had the bottle. Instead, Rishi Sunak's tax hikes on families will wipe out anything announced today.

"The Chancellor's arrogant dismissal of a windfall tax left pensioners sitting in the cold last winter. He should do the decent thing and apologise to them, then get on with slashing taxes for families."

Notes

Under Liberal Democrat plans, a windfall tax on oil and gas companies would raise a total of £11 billion. £3 billion of this would have been raised on the profits of oil and gas companies in Q4 2021 and Q1 2022. Another £8 billion would be raised in the remaining three quarters of 2022, under the party's proposals for a tougher levy of 25% on the excess global profits of oil and gas producers headquartered in the UK.

This compares to just £5 billion being raised under the government's proposals. This is a difference of £6 billion, of £213 per UK household.

• According to recent results from BP, the company saw profits rise by 138% between Q1 2021 and Q1 2022, from $2.6 billion to $6.2 billion. Shell's profits rose by 182%, from $3.234 billion in Q1 2021 to $9.130 billion in Q1 2022. Assuming that the companies see the same increase in profits in the remaining quarters of 2022, they are on track to make a total profit of around £70 billion, of which £40 billion is a super profit compared to last year. Taxing that super-profit at 25% would raise £10 billion, from these two companies alone.

• BP and Shell saw combined super-profits of £7.5 billion in the first quarter of 2022. That's £7.5 billion more than they made the same quarter in 2021. Taxing those windfall profits at 25% would raise £1.8 billion.

• The two oil giants also made superprofits of nearly £4 bn in the final quarter of 2021. That is additional profits compared to Q4 2019 - the equivalent period before the pandemic. If a windfall tax had been introduced in October 2021, when first called for by the Liberal Democrats, it would have raised another £990m in Q4 of last year from these two companies alone.
• BP's quarterly profits can be found here. Shell's quarterly profits can be found here.

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