CHANCELLOR Gordon Brown is preparing to raise taxes on the North Sea oil industry in an attempt to raise funds for health and education without resorting to general taxation.
A Treasury consultation paper is due to be published within weeks, setting out options for skimming extra cash off the profits of the oil companies.
Mr Brown is said to be unconvinced by industry arguments that increased taxes could cost 50,000 jobs in the UK at a time when revenues are depressed by the record low levels in the price of a barrel of oil.
The Government is under fire for failing to meet its highly-
publicised pre-election pledges on education and NHS waiting lists.
Treasury sources said that Mr Brown does not accept the industry's claim that it cannot afford higher taxes, although it is understood that initial proposals have been watered down to be ''fair and reasonable''.
A source said: ''It simply isn't on for them to say they can't pay more. We will put out a document which will include different options, but it is clear they can afford to pay.''
The oil companies have lobbied desperately to block tax changes as part of the Government's review of the oil industry. Their campaign included personal appeals to Prime Minister Tony Blair.
Industry spokesmen claim 2000 jobs have already been lost through uncertainty over the likelihood of tax changes.
A consortium of six companies made up of BP, Chevron, Elf, Enterprise, Conoco, and Amerada Hess said they have shelved plans to develop the huge Clair oilfield, west of Shetland.
The field, the biggest yet discovered in the Atlantic, has 300 million barrels of recoverable oil, but the companies say uncertainty over the tax regime on their investment capital means the project cannot go ahead.
Mr Brown's aides said that he wants to preserve the long-term future of Scottish oil jobs, but that he was not prepared to be bounced out of a decision concerning a sensible tax change.
The consultative document being prepared by the Treasury has studied the oil tax regime in other countries to determine whether companies operating in British waters make higher profits from oil exploration than elsewhere.
The preferred option, which would not hit the companies during periods of reduced revenues, would be a change in the Corporation Tax structure. The Treasury is also said to favour allowing companies to offset exploration costs against tax in order to maintain the incentive for investment.
The price of a barrel of oil remains struck at around $14, scarcely different from the price before the 1974 oil shock.
SNP energy spokesman Alex Neil condemned the decision: ''Instead of taking even more money out of Scotland's hard- pressed oil industry, Gordon Brown should release some of this cash that he is hoarding for a pre-election bonanza in 'middle England' from his Treasury war-
chest.''
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article