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.”