By Martin Kelly
Tax increases imposed by the UK Treasury have harmed investment and made things difficult for the oil and gas industry, experts have told MSPs.
Westminster’s mismanagement of the North Sea fiscal regime was highlighted when industry figures and academics appeared in front of the Economy, Energy and Tourism Committee held in Aberdeen.
Appearing in front of the committee yesterday, Mike Tholen of Oil & Gas UK described the impact of the UK’s record on the North Sea fiscal regime saying: “There have been too many changes and indeed most recently the tax increases have been very hard to bear by an industry which is trying to do some very difficult things.”
His criticisms were echoed by industry expert, Professor Alex Kemp who also condemned the numerous fiscal changes.
Professor Kemp said: “Multiple changes in taxation arrangements make things very difficult for investors who are trying to make long run investment decisions”
“[Westminster’s] record really, as far as taxation policy is concerned, and in terms of maximising economic recovery which is the widely accepted objective, it has left quite a bit to be desired.”
The comments follow similar criticisms of the new ‘bareboat charter’ taxation plans by Colin Pearson of EY, who has warned that Westminster’s latest tax raid on the North Sea could lead to a “scenario that sees a drop-off in the number of new developments” – while GDF Suez E&P UK have also made clear their concerns at the costs to the industry.
Speaking in a recent interview Colin Pearson described the oil and gas sector as ‘booming’.
Commenting, SNP MSP Mike Mackenzie said:
“More and more experts are making clear the negative impact Westminster’s mismanagement of the fiscal regime has had, and is having, on the North Sea.
“Rather than providing certainty and stability for the industry as he promised, David Cameron’s government is simply using the North Sea as a cash cow – damaging the potential for further exploration and risking forcing drilling operations out of the North Sea in the process.
“In contrast, Scotland’s Future makes clear that after independence, the Scottish Government will ensure a stable fiscal regime for the oil and gas sector – and will work with the industry to ensure the greatest benefit is extracted from the remaining 24 billion barrels of oil.
“A Yes vote will give Scotland the fiscal powers we need to support the industry ensuring it is no longer subject to sudden and unexpected tax hikes by the UK Government, and will ensure the wealth from Scotland’s oil will no longer be squandered, but will benefit future generations through the establishment of an oil fund.”