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Budget 2011: Oil industry tax 'will not hit motorists' | |
(about 3 hours later) | |
The windfall tax on oil companies announced in the Budget will not be passed on to motorists in higher fuel prices, a Treasury minister has said. | The windfall tax on oil companies announced in the Budget will not be passed on to motorists in higher fuel prices, a Treasury minister has said. |
The chancellor announced a £2bn windfall tax on North Sea oil producers, to pay for a fuel duty cut. | The chancellor announced a £2bn windfall tax on North Sea oil producers, to pay for a fuel duty cut. |
Labour said the oil firms might recoup this through higher pump prices. | Labour said the oil firms might recoup this through higher pump prices. |
But Danny Alexander said consumers would not be passed these costs because petrol retailers could source oil from whatever source was the cheapest. | But Danny Alexander said consumers would not be passed these costs because petrol retailers could source oil from whatever source was the cheapest. |
In Wednesday's Budget, Chancellor George Osborne said: "The price of oil has risen 35% in just five months. Oil companies are making unexpected profits." | |
He said he would introduce what he described as a "fair fuel stabiliser", adding: "From tomorrow the supplementary charge levied on oil and gas production will increase from 20% to 32%." | |
He said this would raise an additional £2bn ($3.3bn). | |
"I don't want important investment in the North Sea lost," Mr Osborne continued. | "I don't want important investment in the North Sea lost," Mr Osborne continued. |
"If the oil price sustains a fall below $75 - and we will consult on the precise figure - we will reintroduce the escalator and reduce the new oil tax in proportion." | "If the oil price sustains a fall below $75 - and we will consult on the precise figure - we will reintroduce the escalator and reduce the new oil tax in proportion." |
The moves by the chancellor come in response to a recent surge in global oil prices. | The moves by the chancellor come in response to a recent surge in global oil prices. |
As well as cutting fuel duty this year, he said that an inflation-linked rise in duty planned for next week would be delayed until next year. | As well as cutting fuel duty this year, he said that an inflation-linked rise in duty planned for next week would be delayed until next year. |
Labour's Treasury spokeswoman Angela Eagle, speaking on BBC Two's Newsnight programme, suggested oil companies could recoup money lost to the windfall tax by putting up prices at the pumps. | Labour's Treasury spokeswoman Angela Eagle, speaking on BBC Two's Newsnight programme, suggested oil companies could recoup money lost to the windfall tax by putting up prices at the pumps. |
But Mr Alexander, the Chief Secretary to the Treasury, said he could guarantee that would not happen. | But Mr Alexander, the Chief Secretary to the Treasury, said he could guarantee that would not happen. |
He said the suggestion was "complete nonsense" because the North Sea oil companies were entirely separate from those selling fuel at the pumps who have access to a competitive global oil market. | He said the suggestion was "complete nonsense" because the North Sea oil companies were entirely separate from those selling fuel at the pumps who have access to a competitive global oil market. |
"The oil market is a global market. It's not going to feed through to the price of oil," said Mr Alexander. | "The oil market is a global market. It's not going to feed through to the price of oil," said Mr Alexander. |
He went on: "If the oil companies try to pass that on to retailers they will simply buy their fuel from elsewhere. You've got a global market for oil and you've got a competitive market for the supply of fuel, so there is no prospect of that being passed on." | He went on: "If the oil companies try to pass that on to retailers they will simply buy their fuel from elsewhere. You've got a global market for oil and you've got a competitive market for the supply of fuel, so there is no prospect of that being passed on." |
The chancellor's windfall tax plans were given a cool reception by the petrochemicals industry. | The chancellor's windfall tax plans were given a cool reception by the petrochemicals industry. |
"This tax hike could have a chilling impact on future investment in the North Sea," said Mark Hanafin, managing director of Centrica Energy. | "This tax hike could have a chilling impact on future investment in the North Sea," said Mark Hanafin, managing director of Centrica Energy. |
"With more than 50% of Britain's gas now imported, it is vital for our energy security and for the economy that investment is maintained to ensure we extract all of the untapped hydrocarbons we can." | "With more than 50% of Britain's gas now imported, it is vital for our energy security and for the economy that investment is maintained to ensure we extract all of the untapped hydrocarbons we can." |
Shadow chancellor Ed Balls has blamed rising VAT for high pump prices. | Shadow chancellor Ed Balls has blamed rising VAT for high pump prices. |
"The idea that drivers around the country should be grateful for a 1p cut in fuel duty when George Osborne's VAT rise is adding 3p to the price of petrol is laughable," Mr Balls said. | "The idea that drivers around the country should be grateful for a 1p cut in fuel duty when George Osborne's VAT rise is adding 3p to the price of petrol is laughable," Mr Balls said. |
As reaction to the Budget continues, BBC political correspondent Carole Walker said: "Labour will keep up the pressure on the government warning of the dangers of slow growth, rising unemployment and higher than expected borrowing." | As reaction to the Budget continues, BBC political correspondent Carole Walker said: "Labour will keep up the pressure on the government warning of the dangers of slow growth, rising unemployment and higher than expected borrowing." |