The Government’s windfall tax on oil and gas firms is “indefensibly generous” to companies when it comes to the amount they can recoup via investment allowances, the Institute for Fiscal Studies has said RichardVaughan1 reports
Stuart Adam, senior economist at the IFS, said there were aspects of the current windfall tax that could be revised, although he stressed it was unlikely to raise significant sums in additional revenue.
Under the current windfall levy, companies can recoup taxes through the investment allowance, which is currently set at more than 100 per cent, meaning for certain investments they are being subsidised by the taxpayer. “I think you could have a high tax rate permanently,” he said. The whole point of this is North Sea oil and gas is stuck in the North Sea. Unlike corporation tax, in general, it’s not like you’re going to drive companies to other countries, because the oil and gas is there in the UK, whether they like it or not.”
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