Around 8 billion barrels are thought to lie in the fields west of Shetland. See:
French oil giant, Total, began production from two of the fields months ago and their third quarter profits have soared leading to a 40% increase from £1.5 billion in 2016 to £2.1 billion in 2017. Petroleum Revenue Tax was formerly charged at 50% but fell to 35% in January 2016 and was abolished in the March 2016 budget after aggressive lobbying by the oil industry. During the same period Norway, and all of the other oil-producing countries continued to tax oil production as before. Only the UK made a loss in 2016. See this graph for Shell:
Why only the UK? Professor Cumber and Business for Scotland re-told a story that had already been told in 2016 by the International Transport Workers’ Federation and reported in Tax Justice:
‘New analysis of the UK’s North Sea oil and gas suggests that the combination of tax giveaways by the government, and aggressive avoidance by multinationals, means that the country may actually be subsidising the extraction of its natural resources. A new report published today by the International Transport Workers’ Federation (ITF) sets out a series of shocking statistics on the UK’s failure to obtain an appropriate share of its own resource wealth. Among them, these stand out:
- In 2014, UK consumers paid 6 times more tax on petrol, excluding VAT, than the North Sea oil and gas industry paid on all taxes related to production.
- Chevron’s effective tax rate in 2014 on earnings from North Sea production was 5.4%; statutory tax rates (of various types) on oil and gas should have totalled 61-82%.
- In 2014, 3 (Shell, BP & Total) of the top 4 North Sea producers produced more than £4.3 billion worth of oil and gas and received over £300 million in net tax refunds.
The ITF argue that while the oil sector has successfully lobbied for and won huge tax breaks from the UK government, the companies involved continued to pursue aggressive tax avoidance as standard practice. The Chevron report (see graphic for UK structure, click to enlarge) provides a detailed case study of tax dodging tactics which are replicated by others, particularly Nexen – on which the Times had a frontpage splash yesterday, using ITF analysis to show that the Chinese government-backed company received tax credits of £2 billion.’
These giveaways cannot be undone now but we can begin properly taxing the remaining billions of barrels and putting the money in a trust for Scotland’s future. With only a fraction of Scotland’s oil reserves, Norway has tucked away £1 trillion!