"The tax operates on the profits of producers, not on their output. The price producers get per barrel is determined by international markets, so UK producers subject to the tax cannot pass it on to their customers. It's an upstream tax, so it does not impact the end consumer."
"If North Sea producers wanted to invest in their industry, they could do so with the bumper profits they are making from soaring prices, rather than needing tax breaks. The Treasury should look to real opportunities for growth, not this."
The UK chancellor is considering reducing or scrapping the energy profits levy on North Sea oil and gas producers. Economists and experts argue this would not help consumers or the economy. The windfall tax, introduced in 2022 during the energy crisis, targets producer profits rather than output or consumer prices. Since the tax operates upstream, producers cannot pass it to customers. Oil companies currently enjoy substantial profits from rising international prices and do not need tax breaks to fund investment. Experts contend the government should pursue genuine growth opportunities rather than reduce taxation on already-profitable energy producers.
Read at www.theguardian.com
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