RE: Windfall tax31 Jul 2024 09:59
From City AM written by IEA
'Investors have being quietly shelving projects and noisily attacking this tax raid for two years. They have been ignored. British treasure will be left under the ocean and foreign investment will stay at home. A further £5-7bn annual hole will develop in the national accounts as the fiscal regime loses income (£2.2-6.2bn a year) while still needing to pay for existing projects to be decommissioned (£2-3bn pa).
The most unwise element of Labour’s changes is the removal of investment allowances. Sunak justified his tax raid on the basis that it was temporary and generous allowances would retain future interest. Labour justified their effectively permanent increase in the rate to 78 per cent as bringing the UK in line with Norway, who have had a stable high special tax regime since 1975. Norway, however, provide generous investment incentives, boosting them periodically when interest wanes, most recently in 2020 after a market downturn. In consequence there was already capital flight through 2023 that will now accelerate.
Labour’s ignorance may be due to taking their tax advice from a tropical palaeoecology PhD expert in Bolivian droughts during the Holocene, who called for Norway level taxes in clickbait comments on behalf of an ideological climate lobby group during the peak of the Ukraine war price spike. But this is no excuse, their allies in the trade unions have been screaming at them throughout the period about the pending apocalypse for workers.'
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