Labour government told to rethink oil and gas tax plans

The Labour government’s plan to further increase tax on oil and gas operations in the UK has received a growing number of pleas for a rethink.

After the prior government set the effective rate of tax at 75%, through the supplemental “windfall” tax following soaring commodity prices in the wake of the war in Ukraine, the new government wants to move to 78%.

It also wants to extend this ‘windfall’ rate until 2030, and take away tax breaks that had been designed to stimulate continuing investment in the UK North Sea.

Against such a backdrop, companies and workers unions across the UK’s oil and gas supply chain have expressed fears that the move could result in thousands of job losses and threaten crucial investments.

Fotry-two companies, in an open letter, warned that the proposed changes could jeopardize £200 billion of investments in the UK's energy sector, including in renewable energy projects.

These group, including small and medium-sized enterprises, argued that a stable and predictable tax regime is essential for their continued operation and contribution to the UK economy.

Unions, like the GMB union and BRINDEX, called on the government to engage in meaningful discussions with industry representatives, adding that oil and gas workers should not be ignored in decisions that could affect their livelihoods and the country's energy security.