Storm taxes on energy companies can hurt investment: UK industry leader


Industry leaders warn that the UK government’s decision to impose a storm tax on energy companies could hurt investment in the North Sea.

Last month, Finance Minister Rishi Sunak announced a temporary storm tax on oil and gas giants to fund relief packages for households suffering from soaring bills. The government expects to introduce a 25% profit tax on energy companies and generate £ 5 billion ($ 6 billion) in tax revenue.

Offshore Energies UK, a representative of the offshore oil and gas industry, criticized the new taxation at a roundtable attended by Sunak on June 23 in Aberdeen.

Epoch Times Photo
Prime Minister Rishi Sunak at a Cabinet meeting held at 10 Downing Street in London on May 24, 2022. (Daniel Lille / PA Media)

Group CEO Diadora Michie said industry leaders had a “frank and constructive meeting” with the Prime Minister on this issue.

“The energy profit tax is an unexpected new tax that will change the basis of investment,” she said.

“Our industry leaders were clear about their concerns, especially the impact on investor confidence,” she said, “both sides are committed to further discussion.”

“We will work constructively with the UK Government and do our best to mitigate the damage caused by this tax, but as energy companies reduce their investment in UK waters, oil and gas production will decline. “I will,” said Michie. “That is, they will eventually pay less taxes and have less money to invest in low-carbon energy.”

Tax relief measures

According to the Treasury, Snacks emphasized the importance of the sector to the UK’s transition from fossil fuels and emphasized that the government would provide tax exemptions for investments within the sector.

When the government announced a storm tax last month, it also introduced a “new investment allowance” to encourage energy companies to reinvest their profits in the development of domestic energy sources.

A spokesman for the British government said: future. So it is right for us to continue to encourage investment there.

“A levy investment allowance means that you get a total tax savings of 91p for every £ 1 a company invests in, which almost doubles the available tax exemption and if the company invests. The more tax you pay, the less tax you pay. “

PA Media contributed to this report.

Alexander Chan