UK approves windfall tax on oil, gas industry

British lawmakers approved a 25% windfall tax on the oil and gas industry and hoped to raise an extra £5 billion ($6 billion) in a year to ease the cost-of-living crisis for households in the country, Reuters reported early this week.

The Energy Profits Levy, imposed on oil and gas producers in the UK North Sea, aims to capture additional profits from rising commodity prices as demand rises. Over the past year, gas prices have increased by over 70% and crude oil prices by over 30%.

The tax was originally announced by the government in May and has now been approved, with some amendments, by the UK Parliament. The bill has yet to pass the upper chamber to become law, but the move is seen as largely symbolic.

The draft law specifies 2025 as the end date and allows energy companies to offset part of the operating costs against the tax.

Oil and gas companies operating in Britain’s the North Sea have warned the windfall tax will reduce investment and slow output growth in the region.