THE government’s windfall tax on the soaring profits of oil and gas companies has taken a step closer to becoming law after a vote in the Commons on Monday night.

The new levy on oil and gas profits was announced by the then-chancellor Rishi Sunak in May, following Labour’s calls for a windfall tax in light of soaring energy prices.

The government says that the tax will be used to pay for measures to support struggling households with the rising cost of living.

As MPs debated the Energy (Oil and Gas) Profits Levy Bill, Labour put forward an amendment urging ministers to backdate the levy to January this year.

Shadow Treasury minister James Murray said: “Those extra months would raise an extra £1.9 billion for the public finances which we then urge the government to put towards removing VAT on domestic energy bills for the rest of this year.”

Mr Murray also said that Labour did not believe a planned tax break for oil and gas producers within the levy is “right,” as it “undermines the windfall tax.”

He added: “It does not even work on its own terms and it flies in the face of the urgent need to respond to the climate crisis.”

Elsewhere in the debate, Tory Craig Mackinlay said that new Chancellor Nadhim Zahawi should scrap the levy.

Mr Mackinlay said he “had hoped that with the change of Chancellor that we would have quietly disposed of this Bill and not progressed with it to second reading.”

But Green MP Caroline Lucas called for the levy to be made permanent.

She told the Commons: “The reason that I am proposing a permanent taxation is because the UK currently has the lowest tax take in the world from an offshore oil and gas regime. That is not a badge of honour, that should be a badge of shame.”

Treasury minister Lucy Frazer said: “This Bill delivers the energy profits levy, a 25 per cent surcharge on the extraordinary profits the oil and gas sector is making. As we’ve discussed, it will raise around £5 billion over the course of the next year and it will go towards supporting people with the cost-of-living measures that we have already announced in May.

Labour pressed its amendment to a vote, but it was rejected by 289 to 203, a majority of 86.

The Bill now goes forward for further scrutiny in the House of Lords before returning to the Commons.