UK taxes oil giants to help tackle inflation fallout

Britain's finance minister Rishi Sunak on Thursday unveiled a sizable support package for consumers hit by soaring energy bills, with help from a temporary windfall tax on oil giants.

A government package worth £15 billion ($19 billion) will be funded in part by an exceptional levy on soaring profits enjoyed by the likes of BP and Shell that have benefitted massively from surging oil and gas prices.

That marked a U-turn for embattled Prime Minister Boris Johnson, who previously insisted such a move would hinder efforts by oil majors to invest in greener energy.

But Sunak told parliament on Thursday: "It is possible to both tax extraordinary profits fairly and incentivise investment."

The Chancellor of the Exchequer acted after British annual inflation surged to a 40-year high on rocketing energy costs, squeezing household budgets and leaving many struggling to make ends meet.

"We need to make sure that for those whom the struggle is too hard and for whom the risks are too great they are supported," Sunak added.

Countries around the world are experiencing decades-high inflation as the Ukraine conflict pushes up energy and food prices, in turn forcing the Bank of England and other central banks to ramp up interest rates.

Sunak said the new energy tax would be charged on profits of oil and gas companies at a rate of 25 percent.

The tax would raise about £5 billion of revenue over the next year, according to the Treasury.