The Times has commented on the suggestion that a windfall tax be charged on energy company profits, saying:
Singling out for a windfall tax an industry whose profits are rising would have severe disincentive effects if investors feared that it was not just a one-off tax. It would damage investor confidence. It might also deter companies from investing.
The Government has already, with lax fiscal policy, undermined its credibility. Investors and business are unlikely to feel that a windfall tax would indeed be an exceptional measure. It would be seen as simply a tax grab on an industry that happens to be doing well because its profits are highly cyclical. A windfall tax is bad economic management. But more serious for Labour, it is politics of a time that has gone.
No doubt a few will believe the argument, but if they do it's because they want to and not because there is any logic inherent in it.
Let's be clear: no one is saying windfall taxes should be imposed on all profitable businesses. No one ever has. What is being said is that those companies that are earning super-normal profits through circumstances entirely not of their own making and that do not in any way represent a return on entrepreneurial effort should be taxed on that unearned advantage otherwise afforded to a select few at cost to society as a whole.
There is no reason why this will ever deter investment: what is being taxed is not a return to investment.
And as for this being a return to old Labour, if that is true then hallelujah, I say. It's long overdue that it stood up for the ordinary people of this country. That's what such a tax would be. Rupert Murdoch and his empire do the exact opposite.