Business group slams "economically illiterate" windfall tax

Aberdeen & Grampian Chamber of Commerce (AGCC) has urged UK members of parliament to vote down a proposal by the opposition Labour party to impose a windfall tax on the North Sea industry, slamming the move as "economically illiterate."

Labour will call for a vote on May 17 on the windfall tax, which would be a one-off levy on oil and company profits that could raise funds to support those struggling with the cost of living crisis. 

"I think that it is obscene that we have, as a result of soaring energy bills, oil and gas companies making billions of pounds in our country and the government refuses to put a windfall tax on them," Labour shadow minister Ed Miliband said.

UK business secretary Kwasi Kwarteng has warned that a windfall tax would deter companies from investing in the UK, at a time when the government is looking to revive offshore development to help bolster the country's energy security and bring down prices. However, chancellor Rishi Sunak said he wanted to see oil and gas firms invest in new projects "soon", and that "no options are off the table."

In a letter to six northeast MPs, AGCC said the North Sea industry was already on track to pay £10bn ($12.4bn) in tax, which would "fund the support for consumers that opposition parties have called for."

"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," AGCC CEO Russell Borthwick said in a statement. "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."