THE Deputy First Minister has renewed calls for a “fundamental” change to oil and gas taxation ahead of this week’s Budget statement.
John Swinney urged Chancellor George Osborne to announce a package of measures to help the North Sea industry, including the immediate reversal of the 2011 increase in the supplementary charge levied on oil firms’ profits.
The sector has been hammered by the plunging price of oil with hundreds of job cuts announced in recent months
Mr Osborne has already vowed to take further action to support the industry in his statement to MPs on Wednesday.
In a letter to the Chancellor, Mr Swinney said the 2 per cent cut in the supplementary charge announced in last year’s Autumn Statement was “insufficient”.
The Scottish Government wants a new allowance designed to reward investment in the North Sea as well as a tax credit for exploration.
Mr Swinney also called for full consultation with the industry and Scottish Government before any major changes to the North Sea fiscal regime in future.
He said: “The measures in the Autumn Statement 2014 were viewed by many as insufficient. Budget 2015 provides an opportunity to correct this, and put in place a fiscal regime that is simpler, more transparent, and fit for purpose.
“For the Budget to provide a credible response to the challenges facing the industry, it must firstly correct the damage done by the unexpected increase in the supplementary charge at the 2011 Budget.
“The underlying problem is that successive UK governments have placed too much emphasis on maximising the short-term tax take from the industry.
“This has negatively impacted on business confidence, and undermines the industry’s need for a stable long term fiscal environment on which to base their investment decisions.
“The Budget must therefore deliver a permanent shift to a more competitive and predictable tax regime, which will allow investors to shift their focus away from fiscal risk and towards the significant investment opportunities that remain in the North Sea.”
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