{"id":34483,"date":"2016-08-26T13:30:41","date_gmt":"2016-08-26T12:30:41","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=34483"},"modified":"2016-08-26T13:30:41","modified_gmt":"2016-08-26T12:30:41","slug":"why-is-the-uk-so-intent-on-giving-north-sea-oil-revenues-away","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2016\/08\/26\/why-is-the-uk-so-intent-on-giving-north-sea-oil-revenues-away\/","title":{"rendered":"Why is the UK so intent on giving North Sea oil revenues away?"},"content":{"rendered":"<p>New analysis of the UK\u2019s 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\u00a0actually be\u00a0<em>subsidising<\/em> the extraction of its natural resources. And this at a time\u00a0of\u00a0continuing \u2018austerity\u2019 measures, that a\u00a0UN treaty body has <a href=\"http:\/\/www.taxjustice.net\/2016\/07\/06\/un-calls-uk-account-impact-unjust-tax-laws\/\">harshly criticised<\/a> for driving poverty and inequality, undermining citizens\u2019 human rights.<\/p>\n<p>An important shift over the last two decades has been the emergence of\u00a0active civil society movements in many countries focused on the natural resource revenues obtained by their governments: whether sufficient revenues are obtained, and how they are spent. Sadly, such movements have been largely absent in high-income countries \u2014 and nowhere more obviously\u00a0than\u00a0the UK.<\/p>\n<p>The UK provided\u00a0the original base for the Extractive Industries Transparency Initiative, launched by\u00a0Tony Blair back in 2002. But a\u00a0failure to obtain appropriate revenues for the state was seen as a problem of developing countries and corruption, rather than what it is \u2014 an issue of basic state accountability in the face of aggressive multinationals. \u00a0And so for me than a decade, the UK did not even join its own initiative, and only\u00a0became a candidate country in 2014. It\u00a0is <a href=\"https:\/\/eiti.org\/countries\">currently listed<\/a> as \u2018implementing EITI, not yet compliant\u2019.<\/p>\n<p>A <a href=\"http:\/\/www.chevrontax.info\/s\/ITF-CHEVRON-UK-Long-Report-V13-Low-Res.pdf\">new report<\/a> published today by the International Transport Workers\u2019 Federation (ITF) sets out a series of shocking statistics on the UK\u2019s failure to obtain an appropriate share of its own resource wealth. Among them, these stand out:<\/p>\n<ul>\n<li>In 2014,\u00a0<strong>UK consumers paid 6 times more tax on petrol<\/strong>, excluding VAT, than the North Sea oil and gas industry paid on all taxes related to production.<\/li>\n<\/ul>\n<ul>\n<li>Chevron\u2019s effective tax rate in 2014 on earnings from North Sea production was <strong>5.4%<\/strong>; statutory tax rates (of various types) on oil and gas should have totalled\u00a061-82%.<\/li>\n<\/ul>\n<ul>\n<li>In 2014, 3 (Shell, BP &amp; Total) of the top 4 North Sea producers produced more than <strong>\u00a34.3 billion worth of oil and gas and received over \u00a3300 million in net tax refunds<\/strong>.<\/li>\n<\/ul>\n<p><a href=\"http:\/\/www.taxjustice.net\/wp-content\/uploads\/2016\/08\/Chevron-structure-2014.png\" rel=\"attachment wp-att-18001\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-large wp-image-18001\" src=\"http:\/\/www.taxjustice.net\/wp-content\/uploads\/2016\/08\/Chevron-structure-2014-1024x730.png\" sizes=\"auto, (max-width: 920px) 100vw, 920px\" srcset=\"http:\/\/www.taxjustice.net\/wp-content\/uploads\/2016\/08\/Chevron-structure-2014-300x214.png 300w, http:\/\/www.taxjustice.net\/wp-content\/uploads\/2016\/08\/Chevron-structure-2014-768x547.png 768w, http:\/\/www.taxjustice.net\/wp-content\/uploads\/2016\/08\/Chevron-structure-2014-1024x730.png 1024w, http:\/\/www.taxjustice.net\/wp-content\/uploads\/2016\/08\/Chevron-structure-2014-1170x834.png 1170w, http:\/\/www.taxjustice.net\/wp-content\/uploads\/2016\/08\/Chevron-structure-2014.png 1583w\" alt=\"Chevron structure 2014\" width=\"920\" height=\"656\" \/><\/a><\/p>\n<p>The ITF argue that\u00a0while 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 \u2014 on which the Times had a frontpage splash yesterday, using ITF analysis to show that the Chinese government-backed company received tax credits of \u00a32 billion.<\/p>\n<p>The ITF\u00a0analysis covers 2014, when oil prices were still relatively high. Since then the oil sector as a whole has become a net tax drain on the UK budget, not including direct subsidies. On that basis, the ITF conclude that UK taxpayers are now likely to be <em>subsidising<\/em> the world\u2019s largest oil companies to exploit the country\u2019s natural resources.<\/p>\n<p>The report, and much more, can be found at\u00a0<a href=\"http:\/\/www.chevrontax.info\/\">http:\/\/www.chevrontax.info\/<\/a>.\u00a0We highly recommend a visit \u2014 and if you\u2019re in the UK, you may want to raise this with your representatives. (If you\u2019re in Scotland in particular, you want to consider what this analysis entails\u00a0for yesterday\u2019s data showing a large, implicit deficit for an independent Scotland. Would an independent Scotland subsidise the oil and gas sector? In the absence of\u00a0independence, should the UK be doing it?)<\/p>\n<p class=\"no-break\"><em>NB: This blog was first posted on the <a href=\"http:\/\/www.taxjustice.net\/2016\/08\/25\/uks-north-sea-oil-revenues-giving-away\/\">Tax Justice Network website <\/a>and has been reposted here with their permission\u00a0<\/em><\/p>\n<p class=\"no-break\"><em>I happen to think the questions regarding Scotland\u00a0particularly\u00a0pertinent\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>New analysis of the UK\u2019s North Sea oil and gas suggests that the combination of tax giveaways by the government, and aggressive avoidance by multinationals,<br \/><a class=\"moretag\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2016\/08\/26\/why-is-the-uk-so-intent-on-giving-north-sea-oil-revenues-away\/\"><em> Read the full article&#8230;<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,140,10,50,11],"tags":[],"class_list":["post-34483","post","type-post","status-publish","format-standard","hentry","category-economics","category-scotland","category-tax-avoidance","category-tax-gap","category-tax-justice-network"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/34483","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=34483"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/34483\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=34483"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=34483"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=34483"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}