The UK's leading progressive thinktank, IPPR, has responded to the announcement that Shell has made 7.9 billion ($9.8bn) in profits in the last quarter (Oct-Dec 2022), taking their total profits in 2022 to 32.2 billion ($39.9bn), and yesterday announced a new round of share buybacks transferring a further 3.2 billion ($4bn) to shareholders.
Dr George Dibb, head of the Centre for Economic Justice at IPPR, said:
Bill-payers will be rightly appalled to hear that oil giants like Shell are still seeing sky-high profits. Instead of re-investing those profits in the transition to net zero, they're spending billions on enriching their own shareholders and executives, announcing a further 3.2bn of share buybacks this morning. The sheer scale of that transfer of wealth - from bill-payers to shareholders - is inexcusable and demands action from the government. The UK should follow the example set by the USA and Canada and fairly tax these share buybacks to raise hundreds of millions for the exchequer.
A recent report published by IPPR and Common Wealth argued that share buybacks are a direct cash transfer away from households struggling to pay bills, via energy company profits, to already-wealthy shareholders. The report, Buy Back Better, contained the following analysis:
- Share buybacks channel profits from companies to shareholders by increasing the value of shareholders' stock.
- FTSE 100 companies launched 55 billion of share buyback programmes in 2022.
- President Biden recently introduced a 1 per cent tax on share buybacks to help alleviate the cost-of-living crisis in America, and Canada has followed suite by announcing a 2 per cent tax.
- An equivalent tax on UK buybacks could raise between 275 million and 825 million a year, while a windfall tax of 25 per cent could raise 13.5 billion.
NOTES TO EDITORS
- 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
- 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