Oil & Gas UK and the Scotch Whisky Association, representing two of Scotland’s most important industries, both welcomed moves on taxation by UK finance minister George Osborne in his Budget statement on Wednesday.
Oil & Gas UK said the Budget will reduce the headline rate of tax paid on UK oil and gas production from 50-67.5% to 40% across all fields.
Osborne said the UK Government was going “to help one of the most important and valued industries in our United Kingdom that has been severely affected by global events.”
“In my Budget a year ago, I made major reductions to their taxes,” said Osborne. “But the oil price has continued to fall. So we need to act now for the long term.
“I am today cutting in half the Supplementary Charge on oil and gas from 20% to 10%. And I’m effectively abolishing Petroleum Revenue Tax too.
“Backing this key Scottish industry and supporting jobs right across Britain.”
Deirdre Michie, Oil & Gas UK’s chief executive, said: “Today’s announcement does indeed mark further progress in modernising the tax regime for an increasingly mature basin.
“We welcome these measures as they will build on the industry’s achievements in improving efficiency in the face of low oil prices, boosting the sector’s competitiveness and helping to restore investor confidence.”
Meanwhile, the Scotch Whisky Association (SWA) welcomed the UK Government’s decision to freeze excise duty on spirits — but argued that a cut in excise duty would have provided a bigger boost for consumers, the industry and public finances.
“As a result of today’s freeze, tax — VAT and excise duty — remains at 76%, a level that three quarters of the British public believe is too high,” said the SWA.
“The excise duty on a 70cl bottle of Scotch at the average price of £13 is £7.59 and the total tax burden is £9.91.”
The SWA said last year’s 2% cut in excise helped boost revenue from spirits for the UK Treasury by £102 million and the trade body had argued that Osborne should do the same this year.
The UK Government’s Scottish Secretary David Mundell, said: “We have responded to the crisis in the oil and gas industry with a major package of measures worth £1 billion to the sector.
“That’s on top of the £1.3 billion of support previously announced in last year’s Budget and the £250 million Aberdeen City Deal. This will help protect jobs and the long-term future of the North East.
“There will be an additional £650 million available to the Scottish Government through the Barnett formula, as a result of action the UK Government is taking on education and business rates in England.
“This, along with the power to set income tax rates and thresholds which the Scotland Bill delivers, will allow the Scottish Government to invest more in schools and hospitals in Scotland if it chooses to.”