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    Truss rejects a windfall profits tax to fund UK electricity subsidies


    September 8, 2022 - CE Noticias Financieras

     

      Although the big announcement will be made this Thursday, the new British Prime Minister, Liz Truss, announced on Wednesday that the aid she plans to approve to reduce the price of electricity will not be paid for with a tax on the profits made by electricity companies.

      In an ideological debate, far from the schoolyard fights to which the control sessions in the British Parliament with Boris Johnson had been reduced, Truss explained that her objective is to "attract investment" to "increase energy production", and taxes of this type are an incentive to encourage energy companies to do the opposite.

      Opposing him, Labour leader Keir Starmer warned that the only alternative would be to issue more debt that citizens would then have to pay for. "All this so that the electricity companies can take an extraordinary profit of 170 billion pounds, paid for by families," he denounced.

      At this moment, all eyes are fixed on the measures that the British leader will announce tomorrow to freeze the average electricity bill at around 2,000 pounds per year, compared to the 5,000 pounds that could be reached next April, according to analysts. In recent days, her entourage has been launching several trial balloons in the media with various options, ranging from creating a supplement to the bills for the next 10 to 20 years, with which consumers would have to pay back the money, to issuing debt and trusting its payment to the aid allowing faster growth of the economy in the coming years.

      The Bloomberg agency analyzed some of the proposals leaked by the new Downing Street team, which suggest that the aid would prevent a recession and curb runaway inflation, but that, in exchange, it could mean a bottomless hole for the state accounts: the more the price of megawatt/hour rises, the more money the government will have to contribute so that citizens continue to pay the same. "It is a bet of the State in short" of the price of electricity, summarized the analysis.

      The opposition has rushed to demand that electricity companies pay part of the cost, taking advantage of the fact that the EU has already announced that it will do the same, limiting the profits they will be able to pocket. However, the new British Executive has opted to "resist pressure", however popular the measure may be.

      A diversity milestone

      The Truss Cabinet, formed last night, has a historic milestone: none of the four main portfolios of his government has been held by a white man. His Deputy Prime Minister and Minister of Health will be Thérèse Coffey; the Minister of Economy -Kwasi Kwarteng- and the Minister of Foreign Affairs -James Cleverly- are of African descent; and the Minister of the Interior, Suella Braverman, is from an Indian family.

      What has caused a stir within the party is that, despite this diversity, there is a group that has not been rewarded at all: the supporters of his rival in the primaries, Rishi Sunak, who have been ruthlessly purged. Considering that Sunak was the candidate who garnered the most support among the parliamentary group, Truss risks leaving open wounds in his party as soon as he arrives. His bet on measures to solve the energy crisis as a way to establish himself politically, strengthen his precarious position in the polls and silence his internal rivals is becoming increasingly clear.

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