Gas price surge
Treasury will gain £3bn without need for windfall tax
Rising gas prices means businesses servicing the North Sea sector will pay an additional £3 billion levy to the Treasury – offsetting the need for a windfall tax, says trade body OGUK.
The sector’s profits are already subject to corporation tax rates of 40% – double that of all others – so a rise in gas or oil prices always means a bonanza for the UK Treasury.
However, whereas oil and gas companies know that such taxes are coming and so can budget for them in advance, a one-off ‘windfall tax’, as proposed by some opposition politicians, would hit companies’ investment plans.
Jenny Stanning, OGUK external relations director, said: “In the longer-term a windfall tax would be damaging for consumers because it would undermine our competitiveness and discourage energy companies from investing in the UK.
“That would make us even more dependent on imports from places like Russia and the Middle East.
“The UK gets 73% of its total energy from gas and oil. About 24m homes are heated by gas which also generates 42% of our electricity.
“So, the Europe-wide gas shortages are a stark reminder of why the UK should safeguard its offshore sector – and financial stability is an essential part of that.”