Aberdeen & Grampian Chamber of Commerce has urged politicians to vote down plans for a windfall tax on North Sea companies.
In a letter to six north-east MPs ahead of a vote in Westminster today, AGCC argues that the industry is already on track to pay up to £10billion in tax, which would “fund the support for consumers that opposition parties have called for”.
Labour aims to force a vote on the issue in the House of Commons today.
AGCC Chief Executive Russell Borthwick said: "It is our view that this short-term, economically illiterate move will achieve little apart from making the North Sea – already one of the world’s most mature basins – less attractive to investors.
"This would place jobs, tax revenues and our domestic energy security at risk, and also limit ability and appetite to invest in the low carbon research and development we so desperately need.
"The view of the industry is clear; a windfall tax will divert investment, which, perversely, has the potential to drive-up energy bills in the long term."
Oil and gas companies pay tax on profits from production in the UKCS at a rate of 40%, comprising both Ring Fence Corporation Tax plus a Supplementary Charge (RFCT/SC).
The normal rate of corporation tax in the UK is 19% so companies in this sector are already paying more than double this.
It is estimated that the North Sea tax yield for 2022/23 alone may well be more than the £8.1billion forecast by the Office for Budget Responsibility (OBR) and perhaps closer to £10billion according to industry sources.
Mr Borthwick added: "If it reached £10billion, then that would be a £7.2billion increase from the 2020 forecast and sufficient incremental tax revenues to fund the support for consumers that some opposition parties have called for.
"Which begs the question, why are we considering a windfall tax on a sector that already pays tax at a higher rate (40%) than any other?
"If rising international revenues is now the benchmark, then what about other companies? For example BP and Shell’s Q1 2022 revenues were a fraction of Apple’s ($97.3billion), Amazon’s ($116billion) and significantly lower than Microsoft ($45.3billion), Meta ($27.9billion) and Samsung ($63billion).
"Where is the clamour for a windfall tax on these companies, who all have significant operations and sales in the UK?
"Unlike these global tech giants, the North Sea’s operators employ hundreds of thousands of people in the UK and have committed to investing billions of pounds in the UK’s energy transition.
"These projects are crucial to our future prosperity and we need our politicians to take a pragmatic view and be wary of the impact that a smash-and-grab tax raid would have on investment and confidence at what is a crucial time."