BT `can afford' Labour's pounds 1bn tax

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Indy Politics
A leaked document from a merchant bank estimates BT would pay up to pounds 1.4bn in windfall profits tax but the report by Warburgs says it will be "easily affordable".

The report was hailed by Labour as evidence that its tax would be affordable and would work, after it was attacked in advance of the Budget by the Chancellor, Kenneth Clarke.

The internal report by Warburgs, which has advised the Government on privatisation of water, electricity, Railtrack and part of BT, says: "BT would face a liability of pounds 1.4bn ... comfortably affordable". The Stock Market had already built the tax into its calculations.

Gordon Brown, Labour's shadow chancellor, said it showed there had been "massive excess profits" made at the expense of millions of customers by the privatised utilities.

"Our policy of a windfall levy is absolutely right. No amount of lobbying by the utilities themselves or by the friends of the Conservative Party will divert us from introduce the levy," Mr Brown said on BBC television.

But Michael Jack, the financial secretary to the Treasury, attacked it as a "nasty tax". Welcoming the report, Mr Jack said: "Any analysis that is helping to flush out the size, the meanness and the nastiness of this tax is a helpful contribution to the debate."