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The prime minister is planning a £500m-a-year “green” tax on Britain’s biggest energy companies to pay for extra winter fuel payments for the poor and elderly.
The new levy on carbon emissions will be the centrepiece of Gordon Brown’s autumn relaunch. He has come under intense pressure from cabinet ministers to introduce a one-off levy on the profits of utility companies, which are accused of exploiting customers.
Last week Centrica, the parent company of British Gas, announced a 35% price increase. The average British household now faces annual electricity and gas bills of more than £1,200.
No 10 is concerned that a scheme modelled on the 1997 windfall tax would alienate business and could prompt the energy giants to increase their charges still further.
Instead, officials are drafting plans for a new “environmentally friendly” tax, where utilities must buy the rights to produce carbon dioxide.
The government has already announced proposals to raise £2 billion over four years by auctioning so-called “emissions permits”. Previously these permits, created under the European Union’s carbon trading scheme, were free.
Ministers are examining ways of raising more cash from the auctions. If the proportion of permits auctioned for money is increased from the existing 7% to 10% – the maximum allowed under EU rules – a further £500m could be raised from power companies in the coming 12 months.
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Renationalise the lot ... bring back the CEGB and British gas .
Jim, Peterborough,
This desperate government will try anything to gain approval. But the horse is long gone.
Simon Marshland, Bath, UK
"Tax on Energy Companies" who do you think ends up paying it.
Pete , Barry, Wales
Brilliant Mr Brown - and them companies increase the cost to cover the tax
Mike, Sole Street, England
Isn't it odd that the government takes 59% of the companies profits plus 17.5% Vat. Who is really coining it in, BG or GB?
Phil, Warrington, England
He would be better of insisting that the 500 million was invested in infrastructure and generating capacity as if it goes to the treasury it will just get wasted alongside evrything else that the government steals from us
jay, buxton, england
I couldn't stop laughing when i read this. So GB is planning yet another tax raid in some convulated plan to save his job. At least this blatantly shows up 'green' taxes for what they really are...just another form of stealth-tax. Another error that will damage the economy still further!
anthony, Brum,
Just appears to me another stealth tax.
As for Lemar's comments; typical pathetic. I'm a civil servant and we're continuously being cut back but the amount of work goes not go down. There may be issues with governments remit for the civil service but don't blame us who are overworked and underpaid
Eric Cooper, milton keynes, uk
At dinner the other night, my guests and I collated the amount of projects that we knew involving shipping technical jobs to India or administrative jobs to Eastern Europe. We had the figure at 500,000 british jobs on the out never to return. This tax will assist greatly more british job losses.
Peter Mc, Twickenham,
It seems to me there should be a public enquirory as to why Ofgen and the OFT have failed to keep this industry competitive.
As usual this government are trying to shut the door after the horse has bolted.
Ned Gibbons, Stroud,
Instead of taxing Brown should try and save money. 900,000 extra state employees mostly pen pushers cost over £100 billion a year. 1130 Quangos cost over £130 billion. Useless State consultants cost over £100 billion a year. This £400+ billion a year in wasted. Even a moron could save money here.
Lemar, london, uk
a new tax - that's a noel solution!
Mike, Sole Street, England
we need a profiteering tax. profiteering to be defined as the unconscionable exploitation of any market or one's position in any market
peter c, devizes, wessex
Another indirect tax. Utility companies will increase prices to cover this £500 million.
Ian Hardie, Darlington, UK
Too little, too late. Essential utilities in the grip of profit hungry private companies? Disaster for the poor. And there are plenty of poor to be fleeced in this country now.
Jennifer Hobson, Plymouth, England
Yet again the government has shown that its creativity for running the country extends only to implementing another tax. Is there not a way to manage the country that does not involve penalising one group or company? It is not as if they have shown great competence in using these tax revenues.
Darrill, Crawley, UK
Rather than tax the utility companies they should be encouraged to invest in this country to create more storage capacity so that we are not so reliant on imported gas and hence the fluctuations in prices. We will ALL ultimately pay for this headline grabbing TAX decision through higher prices.
Philip, Huntingdon, UK
The energy companies drastically raise prices in the UK because we have no long term gas storage facilities & there is no proper competetion. Gordon should be addressing energy security & breaking the cartel: he only ever thinks TAX. If they pay more in tax they will just raise prices to compensate.
Donna Walker, Effingham, England
Brown hasn't "planned" a new tax. He is incapable of planning. Almost everything he does is a knee-jerk reaction and where there is some semblance of thought the end result is the same - chaos. See 10% tax change & its outcome!!
A.M. Williams, Stafford,
Tax, tax, tax, that's how Gordo's brain works. If he really wanted to bring down fuel bills he would break up the Big Six energy cartel, but that might require some real action.
Paul, Coventry,
A windfall tax on the energy companies would be absolutely idiotic. Who would pay for these taxes? US! This is just another Brown tax. He squanders our money and like mother Hubbard, the cupboard is bare. The sooner we get GB and the rest of them out the better.
Kate G, London , UK
Never mind what you call it its TAX and in the end the electorate pay it. We desperately need an energy strategy and tax is the worst incentive.To those who fall for the headlines Centrica paid 58% tax on the profits. Don't give these wasters any more money they'll call it a tax credit!
roger, bridport,
As stated before by Gerard,can we trust this Government to make the right decision on where this wind fall or green tax was to go.I still believe that the energy companies have indulged in blatent profiteering.They know the free for all is over in the West and are trying to protect profit margins.
John Heron , Dover, UK
Sometimes I'm not so sure how bright Gordon Brown is. Does he think the companies will just accept the 'hit' to their profits, or will they not just put their prices even higher for everyone? They have got used to a certain level of profit, and want to keep getting it.
Arthur, Newcastle,
We only have three global industries left; oil, pharmaceuticals and the city and the last one is looking frail. The government should be looking at ways to foster new industry and so more jobs to we can all reap the rewards rather than beating up on one of our last breadwinners.
Andrew Piercy, Northampton, UK
Tax the obscene salaries paid to footballers, 80K for one and a half minutes possession on a saturday afternoon is rediculous. Stop family allowances, if people can afford to have children they can afford to pay for them.
That's a nice little earner.
m wilson, bidache, france
A windfall tax on the power industry would be a good thing, as they are useing the oil price rise as an excuse to rack up the cost of Gas and Elwctricity to all of us.
The problem is would the mony raised go to help thoes people who genuinely need financial assistance towards the cost of power.
Gerard, Stockport, Cheshire
GB: the non-doms have been made to think twice about residing and working in the UK, then you did a u-turn with corporations overseas earnings. Now after making a God darn mess of the BRITISH econony, you are so egotistic that instead of having and election you are clinging to power and will fail.
J, Dubai,
Yet another knee-jerk response to a headline from Brown.
Please instead let's have a clear energy policy with standardised carbon charges across the whole economy, not simply a tax grab from one of the few industries that is doing well.
Adam, London, UK
Green tax on the energy companies? I wonder how much will remain in the coffers of the chancery and not be distributed! Everyone is being hurt by these MASSIVE energy price increases not just the poor! The Govt was voted in to represent EVERYBODY! Get the price of fuel down rather than greed tax
Kevan, Warwickshire, UK
Is this the same winter fuel payments which are paid to UK pensioners that live in the South of Spain etc? Come on if there is going to be a tax for the 'Poor' then ensure that the poor receive it. to Better still force the energy companies to reduce prices for everyone.
paul, london, uk
The sooner we stop hamstringing this country with ridiculous whimperinings about CO2 and get loadsa cheap coal fired power stations built the better for our economy and well being.
arthur wainwright, Northampton, uk
How can it possibly be a "green" tax, if the money would be used to buy fossil fuels?
Damian, London,
Labours solution to everything - introduce a new tax.
£500 million is enough to drive away businesses but less than the government wastes on useless 'initiatives' which disappear in the cold light of day.
Bernard, Edinburgh, Scotland
Typical labour politics - raise a tax and claim it is about helping the environment. It isn't a green tax, it is yet another Brown tax - when was the last time one of those helped anybody? Consumers will pay it, they always do. Prices and costs are going up and up and these idiots make it worse.
Christopher H, Canberra, Australia
How many sorts of 'poor' can there be that need subsidising to use more of whichever scarce resource ?
-Fuel poor
-Food poor
-Travel poor
-Accomodation poor.
This Government has forgotten the meaning of money and it will all end in Communism and Mugabe-nomics.
Hugo Chavez would be proud!
Pedro, Stratford,
Tax, tax, tax that and controlling people is all this government knows.
Ian Burgess, Bristol,