Energy Windfall Will Kill North Sea Investment
2 August 2024
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In the Media
In the Media
Economic Theory
15 August 2024
Andy Mayer writes for City AM
IEA Energy Analyst and Chief Operating Officer Andy Mayer has written for City AM on the negative impact of the 3% rise in the top rate of the energy profits levy on investment in the North Sea.
Andy wrote:
“Investors have been quietly shelving projects and noisily attacking this tax raid for two years. They have been ignored. British treasure will be left under the ocean and foreign investment will stay at home.
“The most unwise element of Labour’s changes is the removal of investment allowances. Sunak justified his tax raid on the basis that it was temporary and generous allowances would retain future interest. Labour justified their effectively permanent increase in the rate to 78 per cent as bringing the UK in line with Norway, who have had a stable high special tax regime since 1975. Norway, however, provide generous investment incentives, boosting them periodically when interest wanes, most recently in 2020 after a market downturn. In consequence there was already capital flight through 2023 that will now accelerate.
“The wiser path for North Sea investment would be one of low, stable taxation and – if it must be linked to global commodity prices predictable – changes in the rates.”
Read Andy’s full article here.
Andy wrote:
“Investors have been quietly shelving projects and noisily attacking this tax raid for two years. They have been ignored. British treasure will be left under the ocean and foreign investment will stay at home.
“The most unwise element of Labour’s changes is the removal of investment allowances. Sunak justified his tax raid on the basis that it was temporary and generous allowances would retain future interest. Labour justified their effectively permanent increase in the rate to 78 per cent as bringing the UK in line with Norway, who have had a stable high special tax regime since 1975. Norway, however, provide generous investment incentives, boosting them periodically when interest wanes, most recently in 2020 after a market downturn. In consequence there was already capital flight through 2023 that will now accelerate.
“The wiser path for North Sea investment would be one of low, stable taxation and – if it must be linked to global commodity prices predictable – changes in the rates.”
Read Andy’s full article here.
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