Four may escape windfall taxation
Several prime targets for Labour’s proposed windfall levy could escape being taxed altogether, a report by Credit Lyonnais claims.
Excess returns by BT, British Gas, Railtrack and BAA have failed to match the FTSE all-share index average – the best measure, says the bank, for the planned tax – and should not, therefore, be forced to pay up.
The report’s findings come after the main telecommunications unions, the CWU and Society of Telecoms Executives, urged Labour to go easy when applying the tax to BT.
CL’s analysts measured the privatised utilities’ excess returns since flotation to 1 January this year. They argue the advantage of distributing the tax, designed to fund a back-to-work scheme for the long-term unemployed, on this basis is that it does not discriminate.
Companies hardest hit by this calculation would be Northumbrian Water, Southern Water and all the regional electricity companies, except Southern Electric.
Utilities analyst at CL Bruce Bromley said: ‘BT and British Gas have not been performers since privatisation. But that is working by our model.
Labour has not said how it will calculate the tax. It depends on what they use as a cut-off date – both could easily pay up if the point was a year earlier.’
Northumbrian Water Group’s head of corporate affairs, Andrew Panting, cautioned: ‘CL has taken our group as a whole, not just the water and sewerage companies – which are the regulated bits and will be subject to the levy.’
A City windfall expert added: ‘There are a number of ways to analyse this and uncover all sorts of deserving and undeserving reasons to be taxed, but Gordon Brown will tell the Treasury he wants u3bn to u5bn collected, and that will be that.’
