Many Labour MPs have found the answer â€“ windfall taxes. They are proposing a veritable blizzard of these windfall taxes â€“ one for the oil companies, one for the electricity utilities, and yet another for the banks! It leaves the sane asking “What then was the question?”
Would windfall taxes bring down inflationary price pressures? No, not by one penny. Indeed, if the companies they want to tax have real market power as they suppose, they would put their prices up to help pay the tax!
Would windfall taxes make the government popular? Unlikely, as people are fed up with not having enough money in their own pockets â€“ lining the governments pockets some more is not going to make them feel better off.
Would windfall profits improve the efficiency of the sectors paying the taxes? Of course not. It would be more likely to lead to delay or cancellation of some capital investment that could make them more efficient or raise capacity.
Could windfall taxes be routed directly to those who have been losing out under this government? Yes, they could , but that doesnâ€™t look likely. If they used them to pay for the restoration of the 10p tax band that could help a little, but it would still leave us with more damage to business. The government seems resolute in not wanting the cancel its Income Tax hike from the last budget.The banks need more capital, not less. Taxing them more delays the day when they have enough capital to lend on a sensible scale to lift the economy.
Would windfall taxes cheer the left of the Labour party because it would be bashing shareholders, pension funds and savers? Would it be another good hit at the managing and saving classes? Yes, undoubtedly.
Windfall taxes would be great news for the Conservatives, as it would confirm Labour had lost the plot, but bad news for the country.