Scottish Energy Minister Fergus Ewing today responded to Chancellor Osborne’s changes to N. Sea taxes announced in yesterday’s government spending statement.
Speaking this afternoon he said: “Following the UK Government’s admission that it has been 21 years since the oil and gas industry last received a tax reduction, the package of measures announced at the Autumn Statement is a first step to improving the fiscal regime for the industry.
“However, this announcement only goes a short way towards reversing the unexpected and damaging 12% increase in Supplementary Charge tax introduced by Danny Alexander at the 2011 Budget.
They raised tax by 12% in 2011 and now cut by only 2%. To claim credit as they do on an overall tax hike of 10% will not impress many in the industry. They promise more cuts in future but offer no plans far less timescales. That is not good enough.
“It is encouraging to see that the UK Government has taken on board the recommendation from Scotland’s Expert Commission on Oil and Gas in moving towards investment allowances based on capital costs rather than the physical characteristics of a field.
“Spreading this approach more widely should reduce the currently complex and confusing system which acts as a barrier, not an incentive, to investment. In driving forward these changes, it is essential that the UK Government engages with the industry, the new regulator and the Scottish Government to maintain momentum with these critical fiscal reforms.
“The UK Government has also committed to considering the wider economic benefits from oil and gas production rather than simply focusing on the short-term impact on revenue.
“Again, building on Scotland’s Expert Commission recommendations, I strongly believe that this needs to be introduced as part of a fundamental shift in the way oil and gas policy is formulated, focusing on maximising the Total Value Added (TVA) generated by North Sea activity for the wider economy and society.”
Meanwhile, Oil & Gas UK has welcomed the Government’s long term plans for North Sea fiscal reform announced in Aberdeen today by Inverness MP Danny Alexander, Chief Secretary to the Treasury.