Windfall tax is a passport to the political wilderness
The ongoing row over the windfall tax on energy companies seems to miss a fairly fundamental point to me.
There are plenty of good opinion pieces out there criticising the idea. Ross Clark in The Times is worth reading, and if you want a contrary opinion, try, as ever, Richard Murphy, who thinks the tax is necessary and would be a good idea. Chris Dillow offers some intriguing and more positive suggestions for tackling the issue.
Personally, I think the idea is a non-starter because it is politically suicidal.
When New Labour introduced its last windfall tax, it did so for fairly well enumerated reasons, and did so in spite of the fact that it made the party look anti-business, when it was trying to prove the opposite.
At this moment in the electoral cycle, those considerations will come into play in an even more marked fashion.
Britain is about to enter recession, with colossal public debts worked up by a Labour chancellor and now prime minister. Unemployment is threatening to soar, business is suffering, and the tax burden is threatening to rise as the government casts around for solutions to solve its mounting problems.
What worse possible policy could you imagine in that context, than a huge tax grab explicitly designed for redistributive purposes, that will be easily categorised as an anti-business move?
If Brown is forced into it, the comparisons with the demise of previous over-spending and under-performing Labour administrations will be overwhelming. Brown should pursue austerity, and resist this tax move.