Minister Firm On Windfall Tax
A senior government minister has said he doesn't believe the privatised utilities would win a legal challenge against the windfall tax.
The Minister without Portfolio, Peter Mandelson, was speaking last night, after warnings from British Telecom and the airports operator, BAA, that they may try to block any attempt to impose the new tax.
"I don't believe the challenge, if it is made, will succeed. We have checked out the legal foundation of the windfall levy and it is watertight," he told the BBC's Question Time programme.
"It is a very odd day for BT to choose to make these noises and start rattling the cage in this way when they have announced a profit of £3.5 billion," he continued, adding that there was overwhelming public support for the windfall tax.
"I hope that BT and BAA and others will see the sense of making this contribution from the excess profits that they have earned in the past to make a reality of the sort of programme we are going to introduce to tackle youth and long-term unemployment in this country," he said.
One of Labour's commitments is to introduce legislation early - in a budget probably next month - to tax what it regards as the excessive profits of certain utility companies privatised under the Conservatives.
"Duty to shareholders"
BT has said it has a duty to its shareholders to consider a legal challenge to the Government's proposed "windfall tax".
BT's chairman, Sir Iain Vallance, said on Thursday: "If we are stung in a big way for this tax, and if it can be challenged legally, then we owe it to our shareholders to challenge it, and we would do that."
Other companies have indicated that they won't remain passive either.
The privatised airport operator BAA has backed BT's threat, accusing the Government of verging on "irresponsibility" for its handling of the issue.
BAA defended its own record in creating jobs and keeping profits down. It had been damaged by continuing rumours over whether it would be subject to the levy or not.
The Association of Electricity Producers, which represents the electricity generating companies, has also spoekn out against the proposed tax.
Scottish Power, which also owns the regional electricity company, Manweb, and Southern Water, saw its profits rise by more than a third but said it was not resigned to paying the windfall tax. However, it said that its preferred way forward was through consultation with the Government.
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