What could be fairer than a tax on oil and gas’s North Sea winnings?
North Sea oil producers are ripe for a windfall tax. Without moving a muscle, they have benefited from a doubling in the oil price and a quintupling of the gas price over little more than a year.
There are big names in the frame, like BP and Shell, and some minnows that are now making hundreds of millions of pounds from wells offloaded a few years ago by these two lumbering giants of the industry.
If a law could be passed without too much fuss, the trading mega-companies registered in the UK or listed on the London Stock Exchange – Glencore, Trafigura and Vitol among them – would pay a slice of their multimillion-pound profits from rocketing international energy prices.
A separate windfall tax on the profits from BP and Shell’s global operations – expected to be almost £40bn between them this year – could supplement the small sums they would pay for their part digging up the North Sea.
It is clear from recent polling that the public likes the idea of taxing the energy industry’s lottery win. And knowing it is working with the grain of public opinion, Labour has rightly highlighted comments by BP boss Bernard Looney that his company is “a cash machine”.
So far the industry fightback has secured only a handful of supporters, though critically Rishi Sunak is among them.
The chancellor has made plain his opposition, citing the well-worn excuses of an industry that, just like the banking sector in the 00s, says higher taxes will prevent future investment.
The most recent example was George Osborne’s North Sea tax in 2012, which was followed by a decline in drilling. Osborne’s levy was wrongly dubbed a windfall tax – it was not a one-off, but a permanent increase to the toll on profits above the usual corporation tax rate.
In 2015, by
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