THE government’s own tax tsar has attacked the chancellor’s surprise tax raid on North Sea oil and gas producers, just days after British Gas owner Centrica warned it could shut one of its fields in response to the windfall levy.
John Whiting, head of the Office of Tax Simplification (OTS), told City A.M. the North Sea tax raid was a “rabbit punch” – an illegal boxing move aimed at the neck or base of the spine – that was “precipitate and unexpected”.
He added: “If there is one industry that requires stability, it is oil and gas. The long-term nature of the business means companies need visibility to plan.”
The chancellor appointed Whiting to lead the newly-created OTS amid much fanfare last July, and tasked him with simplifying a tax code that he said had become overly complex after “a decade of meddling and intervening” by Labour.
Although Whiting yesterday said he was criticising the chancellor in his capacity as a director of The Chartered Institute of Taxation rather than head of the OTS, his outspoken attack is likely to put further pressure on Osborne, who is facing calls to rethink the windfall tax.
Whiting’s comments come as Centrica, one of the UK’s biggest energy suppliers, said it could permanently close two of its Morecambe gas fields as a direct result of the windfall tax.
“UK oil and gas producing fields are now subject to some of the highest levels of tax in the world,” a spokesperson for Centrica said.
“At these higher tax rates, Morecambe’s profitability can be marginal... Accordingly, we may choose to buy gas for our customers in the wholesale markets in preference to restarting the field after planned maintenance.”
Centrica said the fields produce around six per cent of the UK’s gas needs.
Ed Balls, the shadow chancellor, also hit out at Osborne yesterday, accusing him of putting “short term politics above the long term economic interests of Scotland and the UK”.
Meanwhile, a group of MPs will today publish a report on the tax changes contained in Osborne’s Budget, which will strongly criticise the windfall tax on oil and gas companies.