Scottish parties have slammed the Tories after they announced they will remove the windfall tax on North Sea oil and gas companies if prices fall. The UK Government said it would slash the current 75 per cent tax on profits back to its regular 40 per cent if prices reach certain levels.
The windfall tax has already been criticised by Labour for not working properly, as an investment loophole allows corporations to avoid it. The Scottish Lib Dems said the move shows the Tories “simply doesn’t care about the people who are struggling to get by” while the Greens called it “devastating”.
The UK Government said it would scrap the windfall tax if the average price of oil fell to or below 71.40 dollars per barrel for two consecutive quarters, and the average price of gas fell to under 54p. On Friday morning, Brent crude oil was trading at 75.38 dollars per barrel. UK gas prices were at around 64p per therm.
The windfall tax was first announced a year ago to ensure that oil and gas companies were paying what they owe and not benefiting from Vladimir Putin’s war in Ukraine. The UK Government said: “While the levy included an investment allowance to encourage firms to continue to invest in oil and gas extraction in the UK, industry has warned that companies are cutting back on investment.
“This puts the long-term future of the UK’s domestic supply at risk, meaning we would be forced to import more from abroad at a time when reliable and affordable energy is a focus for families and businesses.”
Oil and gas prices soared after the Russian president launched a full-scale invasion, bent on taking Kyiv in just three days. But well over a year later Ukraine is now pushing to take back the territory it lost in the early days of the war, which started in 2014.
The Government said that the windfall tax will remain in place until 2028 as previously planned unless oil and gas prices fall to the levels needed for it to be revoked. It said that the tax had so far raised £2.8billion since being implemented.
Scottish Liberal Democrat leader Alex Cole-Hamilton said: “Up and down Scotland, families and businesses are still suffering from the devastating impact of high energy bills; they will not forget the failure of the Tories to properly tax the windfall profits of oil and gas companies.
“Yet again, this out of touch Conservative government has shown that it simply doesn’t care about the people who are struggling to get by, or the small businesses that are clinging on. This energy tax failure ranks as one of Rishi Sunak’s biggest personal failures as Chancellor and Prime Minister.”
Scottish Greens environment spokesperson Mark Ruskell said: “This is unbelievable, it is environmentally devastating. What are they thinking? It stinks to high heaven of yet more very questionable backroom deals being struck with profit heavy business and the Tory government, and to hell with the consequences for our planet.
“If anything we should be hitting these shareholder driven corporations with higher taxation to redress the environmental destruction they have wrought on our environment for decades without political challenge from Tory or Labour governments.
“This is the exact opposite of climate leadership. The Tories with their planet abusing policies simply cannot be trusted with our environment, nor to protect the future of our children who look to face worsening emissions, anxiety and fears as a result.”
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