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David Prosser: North Sea investment? What about that tax hike?

 

David Prosser
Thursday 13 October 2011 19:00 EDT
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Outlook In the context of the row over the 50p top rate of tax and the arguments about new levies on banks, the announcement made by BP yesterday makes interesting reading. Isn't the sizeable – and very welcome – investment it is making in the North Sea exactly the sort of development for which the oil industry told us this year's Budget would spell doom?

You will remember that within hours of George Osborne announcing a rise in the supplementary tax paid on North Sea oil profits – from 20 to 32 per cent – organisations such as Oil and Gas UK were warning that projects would be cancelled at the cost of thousands of jobs and billions of pounds of tax revenue. Judging from BP's announcement yesterday, it does not share thatanalysis – indeed, there has never been a time when it has been more active in the North Sea.

It is a case study that the Treasury should consider as it continues its review of the impact of the 50p rate of income tax. Faced with a higher tax bill, both individuals and businesses threaten to do all sorts of things. Sometimes, the threats prove empty.

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