What's happened
Labour's proposed increase in windfall taxes on oil and gas companies has sparked criticism from industry leaders and political opponents. The Offshore Energies UK warns that the changes could lead to a £13 billion loss to the economy and jeopardize 35,000 jobs over the next five years. The party's stance is seen as detrimental to investment in the sector.
Why it matters
What the papers say
According to The Guardian, Offshore Energies UK has presented data indicating that the proposed tax changes could lead to a significant drop in investment and job losses. David Whitehouse, OEUK's chief executive, stated, "This is a government that has made economic growth its main priority, and yet our analysis shows that its policy will ultimately reduce this sector’s contribution to the UK economy." Meanwhile, The Scotsman highlights that Labour's windfall tax plans could cost the economy £13 billion and put 35,000 jobs at risk, with SNP MSP Kevin Stewart asserting that Labour is abandoning Scotland's oil and gas sector. The BBC News report reinforces these concerns, noting that the total tax rate on profits for energy firms could rise to 78%, which industry leaders argue will undermine their ability to support economic growth.
How we got here
The Labour government plans to raise the Energy Profits Levy from 35% to 38% starting November 1, 2024. This move aims to increase tax revenues from the oil and gas sector, which has seen significant profits due to rising energy prices. However, industry groups warn of severe economic repercussions.
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Oil & Gas UK is the leading trade association for the United Kingdom offshore oil and gas industry. The current Chief Executive is Deirdre Michie O.B.E.
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The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northwestern coast of the European mainland.