Scotland to lobby Treasury to cut oil and gas ‘tax burden’

The Scottish Government is seeking an urgent meeting with Chancellor George Osborne to urge him to reduce the North Sea’s “tax burden”. First Minister Nicola Sturgeon said only the Chancellor […]

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By Priyanka Shrestha

The Scottish Government is seeking an urgent meeting with Chancellor George Osborne to urge him to reduce the North Sea’s “tax burden”.

First Minister Nicola Sturgeon said only the Chancellor can deliver “competitive tax regime” the oil and gas sector needs following the Scottish Cabinet’s meeting.

Scotland has been hit by the collapse of global oil markets, resulting in hundreds of job losses so far. The cost of a barrel of oil has fallen from more than $100 (£70) in January 2014 to less than $30 (£21) this month.

The call from the Scottish Government comes ahead of the Chancellor’s budget in March.

Ms Sturgeon added: “There is no doubt the industry is currently facing an extremely challenging outlook but oil and gas can continue to make a significant contribution to the Scottish economy and energy security for decades to come. However, this will only be achieved if we support the industry through this difficult period, encourage investment and ensure it remains well placed to benefit from a future upturn in oil prices.

“The Scottish Government is taking action to support the industry at this difficult time but this needs to be matched by a commitment from the UK Government to address the fiscal regime in which the industry operates.

Image: Thinkstock
Image: Thinkstock

“We will continue to make the case to the UK Government for urgent action in the forthcoming Budget to lower the tax burden on the industry, a move that will help to protect jobs and investment.”

She said the Cabinet has agreed to ensure the oil and gas industry retains its workforce, support to remove barriers to exploration and improve collaboration between industry and academics as well as help new and existing technology to improve production while addressing financial issues.

The UK Government said it is committed to supporting the oil and gas industry and the tax rates are kept under review.

A spokesperson added: “At the March Budget 2015, we introduced a package of reforms worth £1.3 billion to support the sector, including reducing the headline tax rates and introducing a new Investment Allowance to reward companies investing in the UK Continental Shelf.

“This package is expected to encourage over £4 billion of additional investment over the next five years. We also recently set out our strategy to maximise economic recovery through better collaboration between companies and improved cost efficiency.”