Energy companies, banks and windfall taxes

Should energy companies have to pay a windfall tax? There are many people, including a significant number of Members of Parliament feel that the energy companies should pay a windfall tax. The argument goes that the energy companies have to pay 30% more for their wholesale costs and they are imposing a 30% price increase on their retail prices to their customers, which means that they are getting a greater profit per unit sale by imposing a price increase on retail charges which significantly exceeds what they have to pay on whole charges.

Similarly the banks are now into windfall territory, but not in order to make larger profits. They are exploiting their position to bolster up their reserves having lost vast amounts of money in buying dud subprime mortgages which were not worth anything like the sums they paid for them. Continue reading