Swinney urges Chancellor to use Budget to cut tax for oil industry

George Osborne . Picture: AP
George Osborne . Picture: AP
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The Chancellor has been pressed to take “urgent action” and cut the headline rate of tax for the struggling North Sea oil industry in his Budget next month.

Deputy First Minister John Swinney has written to George Osborne highlighting the “substantial challenges” the sector is facing amid plummeting prices, and setting out a package of measures he wants the UK Government to adopt.

Mr Osborne cut the supplementary charge on oil industry companies’ profits from 30 per cent to 20 per cent in his Budget last year.

But Mr Swinney said there must be a further “substantial reduction” in the headline rate of tax in order to create “an internationally competitive tax regime in the North Sea”.

He told Mr Osborne: “If the stated aim of your government is to maximise economic recovery, this must be reflected in the design of the taxation system.”

Mr Swinney said “regrettably” no measures to support oil and gas were included in last year’s Autumn Statement, and added that since then, “the outlook for the sector has deteriorated further” with prices having fallen below $30 a barrel (£20.70) last month.

Mr Swinney is also calling on the UK Government to change the tax regime to encourage exploration.”