OEUK: calls to increase windfall taxes on oil and gas producers are “deliberately misleading”

(WO) – PA, Reuters and others have reported calls by opposition politicians and union leaders for another increase in the windfall taxes on energy producers, linked to BP’s latest global profits announcements.

Offshore Energies UK, the trade body for the UK’s offshore energy industries and supply chain companies, said such a levy risked breaching global tax agreements and could never be implemented.

Mike Tholen, OEUK’s director of sustainability, said it was wrong to offer false hopes to hard-pressed consumers. “These calls for an increase in the UK windfall tax, linked to the global profits of energy producers, are deliberately misleading. The UK is subject to global tax agreements which say that it cannot tax profits made by companies outside of the UK. That means such a tax could never be implemented. It is irresponsible to pretend otherwise.”

According to Tholen, companies that operate in the UK already face a 75% windfall on profits they make in the region, which is the highest for any industry.

“That means the UK government is actually the biggest beneficiary of the high prices generated by the Ukraine conflict,” Tholen said.”

The OEUK director expressed concerns that high windfall taxes are driving business out of the UK, which is counterintuitive to previous acknowledgments by the government that oil and gas is still important to energy security.

Higher windfall taxes “will reduce production, undermine the UK’s energy security, destroy jobs and ironically, drive down tax revenues. It will also damage the skilled workforce needed to drive the transition to low carbon energies.”

Tholen pointed out that multinational companies have several subsidiaries overseas and make a majority of their profits in other countries, where profits are taxed. He said that companies “would all leave,” if the UK imposed a second tax on entities with headquarters in the UK.  

"It would also be invidious for the UK to tax profits made in other countries. The taxes on those revenues belong to the countries where they were generated. It would be wrong for another country’s revenues to be effectively seized by the UK.

“Our industry wants to work with politicians of all parties to build the UK’s low-carbon energy future. We need long-term energy policy plus fiscal and regulatory stability if we are to achieve net zero.”