‘No plans’ for oil windfall tax

May 6th, 2008
by John Donovan.

BBC News: ‘No plans’ for oil windfall tax
Petrol pumps

Shell recorded bumper profits in the first few months of 2008

 

The government has no plans to levy a windfall tax on oil companies’ profits, saying it would rather encourage them to invest in North Sea oil.

Minister Lord Davies told peers a supplementary charge on oil profits was increased in 2005 and most recent profits were from overseas investments.

Royal Dutch Shell made profits of £3.9bn in the first three months of 2008. BP’s profits rose 48% to £3.31bn.

Lib Dem Lord Dykes suggested the tax could be used to fund wind farms.

In January, the Unite union called for the government to impose a windfall tax on oil companies’ profits – after Royal Dutch Shell reported record profits for a UK-listed company.

‘Disappointment’

During business questions in the House of Lords on Tuesday, Lord Dykes asked the minister if the government would consider an “eye-catching proposal” – levying a windfall tax on oil companies’ 2008/09 profits to encourage firms to invest in wind farms.

But Lord Davies said it was important that “we realise the assets in the North Sea which still remain there” still “require investment”.

“What we need is consistency in taxation of the oil companies. The windfall profits of oil companies in recent months are derivative largely from their overseas investment – the North Sea, as far as BP is concerned, only accounts for 10% of its profits.”

He added: “Policy is reviewed as part of the annual Budget process. There are no current plans to introduce a windfall tax on oil companies.”

But he admitted it was a “disappointment” that Shell had announced it would pull out of a giant wind farm scheme in the Thames Estuary.

Last week the company said it favoured investing in US wind power instead, as the US government’s incentives offered “competitive returns”.

http://news.bbc.co.uk/1/hi/uk_politics/7386193.stm
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