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DISAPPOINTMENT FOR SCOTTISH OIL AND GAS INDUSTRY
[ 25-03-2011 ]
Commenting further on the Chancellor of the Exchequer’s announced increase to the Supplementary Rate of Corporation Tax for the North Sea Oil and Gas Sector, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“The unexpected increase in the Supplementary Rate of Corporation Tax for the North Sea Oil and Gas sector from 20% to 32% is a real blow to a mature industry already paying high rates of taxation. The impact of this increase is likely to be far reaching and we are concerned the implications have not been properly thought through.
“The proposed tax rate will produce a rise from 75 – 81 per cent on mature fields already subject to Petroleum Revenue Tax (PRT) and from 50 per cent to 62 per cent on those fields not subject to PRT. This is likely to have a marked effect on future investments over the next 2-3 years, particularly worrisome for an already tight and highly competitive international industry.
“Most at risk are the smaller independent companies which exploit smaller, more marginal fields. These firms have much higher break-even costs and are more in need of a stable fiscal environment. The industry is dependent on such companies, without whom production is likely to decline and make imports a necessity. We would argue this is not good for the industry, nor the government’s coffers. We are also concerned about the potential effects on the oil and gas industry’s extensive Scottish supply chain, which employs many thousands of people right across Scotland.
“We see this latest move to be at odds with the government’s stated aims of fostering growth, employment and exports, with an estimated tens of thousands of jobs at risk. We urge the government to reconsider what could be a hugely damaging policy to Scotland Plc and the UK as a whole.”
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