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The windfall tax announced by the chancellor will be “damaging” for the UK’s net zero plans and energy security, the Confederation of British Industry has said.
Rain Newton-Smith, CBI chief economist, said the tax “sends the wrong signal to the whole sector at the wrong time”, pointing to a “backdrop of rising business taxation”.
Chancellor Rishi Sunak said oil and gas firms will pay a 25% levy on profits which would be phased out when prices return to normal – but he said companies would get 90% in tax relief for any profits they invest.
Mr Newton-Smith said the government needs to work with businesses on a “genuine” plan to increase investment and “get growth going again, particularly in areas like energy efficiency”.
“Despite the investment incentive, the open-ended nature of the energy profits levy – and the potential to bring electricity generation into scope – will be damaging to investment needed for energy security and net zero ambitions,” he said.
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