The history of the extractive industries is riddled with corruption. Some is on a grand scale. Some is petty. Some definitely involves paying people off using public money - as the offer to local authorities of a small cash bonus if they permit fracking in their area appeared to be yesterday.
But in every case the corruption is essentially about capturing the rents due from the extractive industry to the state, usually in the form of a royalty and sometimes in the case of a profits tax.
In the UK we have set this tax rate especially low. There will be little tax bonanza for the UK as a result. There will be for big business.
We blew North Sea oil's potential to build our future. If we have to frack (and I am not convinced) surely we are not going to blow the tax again, are we?
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I’ve heard that there are ‘incentives’ for councils to allow fracking – is this true?
If so, this is more public money being used to create bonanzas for big business.
Fracking sounds like a disaster with chemicals poisoning the water table. We will do anything rather than change our patterns of consumption.
The offer to local authorities is an obvious political bribe – but it’s hardly ‘corrupt’ for one branch of government to transparently offer to pass funds to another. Central government has never been averse to using funding to bend local government to it’s will. If you want to avoid that then the answer is more power (and, therefore, more money) under local control.. not less.
If you support the current balance of power/funding, then it’s hard to object to the obvious (even if unintended) consequences.
Good point.
I don’t know much about extractive industry tax – My only involvement was in Botswana and some coal mining venture which was part of a larger project. I recall we had to look at a royalty payable to the government and some form of progressive tax on some measure of profits – from memeory profts before interest so MNC’s couldn’t use gearing as a way to reduce that progressive tax but I may be misremembering.
Anyway, it was certainly giving a much better return to the Botswana government than fracking will give to the UK.