Page 4 - EurOil Week 45 2022

EurOil COMMENTARY EurOil

UK mulls further hike

in windfall tax

The UK is looking to expand a windfall tax on the oil and gas industry that imposed earlier

this year, even as it tries to encourage more investment in domestic production

UK THE UK North Sea industry has expressed out- investing in UK waters if … Hunt … carries out
rage over reports that the government is propos- threats trailed in the media.”
WHAT: ing to raise a tax on energy profits. “The UK’s oil and gas producers were already
The UK government is UK Finance Minister Jeremy Hunt is mulling paying an effective tax rate of 40% – the highest
looking to increase its a significant increase in the windfall tax on oil rate of any industrial sector – on the profits from
windfall tax on the oil and gas companies’ income, and may extend oil and gas production, before the additional
industry. the levy to power generation firms, as he looks 25% windfall tax was imposed earlier this year,”
at ways to balance the country’s public finances, OEUK said. “It means they are already now pay-
WHY: sources told Reuters on November 12. The ing a 65% tax rate.”
The government is under idea is “under consideration” ahead of Hunt’s A further 10% increase would therefore bring
pressure to show it is announcement of a new budget plan on Novem- the overall tax level to 75%, OEUK said, “a rate so
balancing the books. ber 17, one source said. high that many oil and gas producers would have
According to The Times newspaper, the levy to reconsider investment plans worth billions.”
WHAT NEXT: would be raised to 35% from the current rate “OEUK has told Mr Hunt that its members
The industry has of 25%, which was introduced by the Johnson are proud to pay their taxes but long-term fis-
slammed the move, administration earlier this year. It would also cal stability and intelligence taxation were
warning it will cripple apply to electricity generators and continue until essential to the future of an industry that plans
investment and leave the 2028, instead of 2025 as currently planned. The and invests over years and decades,” it said. “It
UK more dependent on newspaper estimated that the tax would raise has also warned that a reduction in investment
imported oil and gas. some GBP45bn ($53bn) over the next five years. would soon translate directly into reduced UK
The reported plan has already been rebuked production of gas and oil, damaging jobs, under-
by the UK oil and gas industry. Industry associa- mining the UK’s energy security and driving up
tion Offshore Energies UK (OEUK) warned that imports.”
“oil and gas companies risk being driven out of The move would also undermine the UK’s

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