At a hustings in Cheltenham, Ms Truss said she “absolutely” did not support windfall taxes, calling it a “Labour idea”.
“It’s all about bashing business and it sends the wrong message to international investors and to the public,” the foreign secretary added.
Nevertheless, as chancellor, Mr Sunak introduced a 25% windfall tax to the profits of the oil and gas sector at the end of May.
Presumably, Truss is preaching to the converted (business owners and shareholders) … and their self-interest will override their common-sense … Truss, of course, is just dumb enough to believe her own rhetoric.
On the one hand Truss is right, profit as a concept is not evil. Indeed, it is the central pillar of the capitalist structure. Without profit there would be no investment or growth.
However this statement also shows a woeful lack of understanding of how badly structured markets can create problems. Extreme profit is the sign that a market is not working. It shows there is a monopoly or a lack of regulation. It is why countries have anti-trust laws and give themselves the powers to intervene when the extreme profits are working against the interests of the consumers and the nation.
Truss is showing she does not understand these things. She thinks its all super simple. It is not and she will be a terrible PM if this her level of knowledge and understanding.
Wouldn’t worry about it. Once someone explains to her what a vote losing idea her views about protecting the electorate/customers are, she’ll u-turn as per usual.
I can’t believe Ms Truss came out with this. She was right in one respect, though. Profit is not evil. But profiteering is. Think she might have put her foot right in it with this one.
Who judges what is profit, and what is profiteering ??
Is there an established % allocated for d etermining ‘fair’ profit ??
Or is the sky the limit as seems to be the case at the moment ??
Would it be possible to set a limit ??
Its a good question. But is the answer not quite obvious? There will be historic profit levels and peer group profit levels and even cross-industry sector profit levels. Should these dramatically change for one or for a small group of companies over a short period of time then it must look like excessive profits. Especially if these companies cannot evidence investments or changes they’ve made to drive this profit change.
For me, the harder question is what to do when excessive profits occur. Taxation? Regulation change? Price capping?
@strathmore , l think taxation ‘should’
be the simple way to deal with profiteering
But how do you tax a multi national corporation that has been designed
specifically to avoid taxation ??
Price capping would need to be done at the point that the product is sold
to be effective, ( at the auctions) ?? Is this possible ??
Is the ‘world market’ concept we are operating under at fault ??
If France can look after it’s people then why can’t the Westminster lot do something too. OR, do they all have shares in the energy companies and they would lose money.
I guess that the French government see this as relatively straightforward. EDF is a state company and is both the producer and the distributor of electricity. There is not the artificial market for energy that the UK created in order to put energy in the private sector and created multiple businesses with the idea that they would compete with each other in order to bring prices down. That has not quite worked, has it?
