Risk & Economy » Tax » Oil tax regime unsustainable, Osborne warned

Oil tax regime unsustainable, Osborne warned

The tax regime oil companies operate under is not compatible with current prices, the industry's body says

TAXES on North Sea oil must be brought down as quickly as they were raised, according to Oil & Gas UK, the body representing Britain’s extractive industries.

The Treasury announced in the Autumn Statement a single allowance for North Sea oil activity in order to simplify the regime and “reward investment” as part of a £7bn package.

George Osborne also dropped taxes for North Sea companies by 2%, from 62% to 60%, but in his 2011 Budget, he raised them 12%.

“If you are so swift to put things up, you have to be swift at bringing them down too,” Oil & Gas UK economics director Mike Tholen told City AM. “The government has to being in the allowance as well as bringing the tax down by 10%. They have to finish what they started in tidying the regime up.”

Osborne introduced the higher tax rate three years ago, when oil prices were around $100 (£66) per barrel. After six months of declining prices, Brent crude oil stood last week at a five-year low of $50 a barrel.

“It’s a different world now,” Tholen said. “It’s simply incompatible with current oil prices.”

Share
Was this article helpful?

Leave a Reply

Subscribe to get your daily business insights