The last 10 years has not exactly been a golden age for the reputation of banks in general, some of whom are blamed by consumers for their part in the great financial crisis. But the banks are not alone in commanding less-than-rosy profiles. Two groups of utility companies, power and water, are down there with the worst in the estimation of many of their customers.
News last week that electricity company profits are running at around 32 per cent has inflamed passion among consumers. At the same time, the Financial Times was arguing that ‘water privatisation looks little more than an organised rip-off’.
That set me thinking. You don't have to look far in the UK tax system to find industries which have their own tax regimes. For example, oil and gas companies working in the UK and the UK continental shelf have a complicated tax regime which, at its simplest, reflects not only the enormous risks which some of these companies shoulder and the associated huge levels of development expenditure, but also the massive flow of revenues which is derived from a successful well.
Then there's the bank levy. This was introduced after the financial crisis and came into force in January 2011. Whereas the tax regime for UK oil and gas companies is broadly based on income and expenditure, the bank levy is based on the total liabilities and equity shown in the bank’s balance sheet.
By way of a third example, in April 2015 the UK diverted profits tax came into force. This imposes a levy of 25 per cent on profits diverted to tax havens via contrived arrangements. Its nickname ‘the Google tax’ gives reasonable indication as to the identity of the sector likely to pay most of the levy.
In earlier tax briefs, we've commented on the Treasury's need to expand the UK tax base, and the Chancellor's enthusiasm for boosting the stream of tax revenues in order to support the UK during the period of uncertainty which will follow Brexit. Pulling all these threads together, will the Chancellor use the Autumn Budget to announce a tax surcharge on water and electricity company profits? A fixed-percentage increase in the rate of corporation tax levied on utility company profits would be simple to administer, it would raise a worthwhile sum for the Treasury and would be electorally popular.
Looks like a runner for the Autumn Budget, if you ask me.