UK oil industry applauds Labour budget proposal
The UK upstream industry Wednesday welcomed a preelection budget statement from Chancellor of the Exchequer Gordon Brown that put the accent on a stabilized corporate fiscal regime to maintain the growing confidence in the "North Sea oil and gas sector as a competitive place to invest."
LONDON, Mar. 7�The UK upstream industry Wednesday welcomed a preelection budget statement from Chancellor of the Exchequer Gordon Brown that put the accent on a stabilized corporate fiscal regime to maintain the growing confidence in the "North Sea oil and gas sector as a competitive place to invest."
The Labour government's budget, likely to be the last before a general election in May, aimed to take "steps to create the best modern environment for business," said Brown. He said the budget built on an earlier reduction of the corporation tax rate by moving ahead with plans for the further modernization of the corporate tax system to meet the needs of an increasingly knowledge-based economy.
"Our vision for the future of the tax system for companies is that by combining a wide and stable tax base with low and stable rates and a constant commitment to international competitiveness, we encourage innovation, investment, and entrepreneurship," stated Brown.
Ian Wood, chairman of UK contractor Wood Group and cochairman of the UK Oil and Gas Industry Leadership Team�the industry-government competitiveness working group�called the budget "good news" for an industry working to ensure ongoing investment in a maturing oil and gas province.
"Our industry has worked closely with government since 1998 to tackle the challenges of the maturity of the North Sea, and in the last year we have seen that effort rewarded as investment and activity levels have picked up in the UK upstream sector," said Wood. "This continued fiscal stability is vital for the 270,000 jobs in the sector."
The UK Offshore Operators Association echoed Wood's remarks, saying that the budget made clear that the government "understands fully the economics of the UK industry and the challenges its faces from other parts of the world for investment capital."
Brown�s budget also provided for "further consultation" on proposed legislation to abolish capital gains tax (CGT) for companies when selling "significant"�20%-plus�shareholdings.
In July 1999, the government announced it was to reinstate CGT rollover relief for the transfer and sale of offshore licensed interests.
Danny Carrigan, national officer of the Amalgamated Engineering and Electrical Union, said, "This budget can only serve to help build confidence and encourage the investment that is vital if we are to maintain the high quality employment that this sector provides.�
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