Shell’s Record UK Profit Fuels Calls For Windfall Tax

by Jason Gorringe, Tax-News.com, London

08 February 2005

Calls for a windfall tax on exceptionally high profits have been heightened after Anglo-Dutch oil giant Shell revealed profits of $17.59 billion (£9.31 billion) last week.

The firm’s profits, which equate to more than £1 million per hour, have set a new record for a British company, easily surpassing the £7.7 billion ($14.37 billion) profit achieved by global banking giant HSBC last year.

While these earnings were dwarfed by US oil firm ExxonMobil’s announcement last week of a $25 billion (£13.2 billion) profit, the news has nevertheless fuelled calls for the government to impose additional taxation on corporations with substantial levels of profit.

Branding the figure as “obscene,” Tony Woodley, the general secretary of the Transport and General Workers Union stated in a report in the Daily Telegraph that: "with our pensions in crisis, these profits are 9.3 billion extra reasons for a windfall tax. There are massive profits being made in the oil and banking sectors. The Government should grasp the nettle so everyone can benefit."

However, while Martin O'Neill, the chairman of the Commons' trade and industry select committee, believed that a windfall tax should be considered, the government has stated that it has no plans to introduce such a levy.

Rejecting the need for an extra tax on its profits, Malcolm Brinded, a Shell executive, argued that the company already makes a substantial contribution to the British economy.

"We are one of the few companies which has a large UK shareholder base which is globally successful. The UK economy benefits from that, it benefits from employment, it benefits from taxes and it benefits from dividend flow,” he noted, according to the Telegraph.

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