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:
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Share buybacks channel profits from companies to shareholders by increasing the value of shareholders' stock.
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FTSE 100 companies have already announced 46.9 billion of share buybacks so far in 2022.
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President Biden has recently introduced a 1 per cent tax on share buybacks to help alleviate the cost-of-living crisis in America.
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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
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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
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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
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Common Wealth is an independent progressive think tank that designs ownership models for a democratic and sustainable economy. www.common-wealth.co.uk