LONDON: In a bid to raise tens of billions of pounds to fill a major shortfall in public finances, the UK's finance minister, Chancellor of the Exchequer Jeremy Hunt, has announced an increase to a windfall tax on oil and gas companies, and also extended it to power generation firms.
The measures were among a series of tax increases and public spending cuts announced by Hunt in parliament.
Soaring oil and gas prices caused by Russia's invasion of Ukraine have increased household energy bills and triggered the worst cost of living crisis in the UK for generations.
According to Hunt, oil and gas companies would pay 35 percent more than the current rate of 25 percent, which will be extended until the end of March 2028, bringing the total tax on the sector to 75 percent.
The windfall tax will be expanded to electricity generators the government deems "extraordinary," including low carbon power generators such as wind and nuclear, with a levy of 45 percent being applied from 1st January.
Known as the Energy Profits Levy, the higher windfall tax on oil and gas producers that will take effect on 1st January is expected to raise 40 billion pounds over the next six years.
However, industry body Offshore Energy UK said the windfall tax will "threaten to drive out investors, drive up oil and gas imports and leave consumers increasingly exposed to global shortages."
At the same time, the UK government said that it will reduce its investment allowance plan for spending on new oil and gas extraction to 29 percent of all investment expenditures.