IPPR - BP profit reaction: record profits and record transfers to shareholders should be taxed to raise billions for UK

2 Nov 2022 10:21 AM

The UK’s leading progressive thinktank, IPPR, has responded to the announcement that BP has made $8.2bn (£7.1bn) in profits in the last quarter (Jul-Sept) and announced a new round of share buybacks totalling $2.5bn. IPPR’s recent publication Buy Back Better argues that these buybacks are a direct cash transfer away from households struggling to pay bills, via energy company profits, to already-wealthy shareholders.  

Dr George Dibb, head of the Centre for Economic Justice at IPPR, said: 

“Companies like BP are making huge profits and channelling these straight back to already-wealthy shareholders through share buyback schemes. Instead of reducing costs for consumers or investing in renewable energy, these fossil fuel giants are prioritising transfers to shareholders. BP yesterday announced a new buyback programme of $2.5bn, totalling $8.5bn this year alone. 

“There is an alternative. The US have recently levied a tax on share buybacks and the UK should follow suit. A 25 per cent windfall tax on the share buybacks of BP and Shell would raise up to £4.8 billion per year for the treasury. Taxes which could be spent on supporting households across the UK.” 

A new report published by IPPR and Common Wealth last week contained the following analysis: 

• Share buybacks channel profits from companies to shareholders by increasing the value of shareholders’ stock. 

• FTSE 100 companies have already announced £46.9 billion of share buybacks so far in 2022. 

• President Biden has recently introduced a 1 per cent tax on share buybacks to help alleviate the cost-of-living crisis in America. 

• A 25 per cent tax on share buy backs could raise £11 billion a year, with £4.6bn of that from Shell and BP. 

Dr George Dibb is available for interview  

NOTES TO EDITORS 

1. The IPPR paper, Buy back better: The case for raising taxes on dividends and buybacks, can be found here: https://www.ippr.org/research/publications/buy-back-better-the-case-for-raising-taxes-on-dividends-and-buybacks 

2. IPPR is the UK’s pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain’s only national think tank with a truly national presence. www.ippr.org 

3. Common Wealth is an independent progressive think tank that designs ownership models for a democratic and sustainable economy. www.common-wealth.co.uk