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Taxation Policy

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Government and North Sea Oil

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Abstract

The following chapter attempts to analyse the development of North Sea oil taxation since the early 1970s. A complicated tax structure has evolved and the emphasis of this chapter is on the reasons why the system has become so complex and why it has changed so frequently, rather than on the effects on company profitability or government revenues of the various tax rates and allowances. The economic theories of politics and bureaucracies are applied to the changing tax system in order to provide some explanation of the rationale behind the changes. The extent of the changes is considerable. For example, Petroleum Revenue Tax (PRT) was introduced in 1975 at a rate of 45 per cent. Since then, it has been increased to 60 per cent, 70 per cent and currently is 75 per cent. A Supplementary Petroleum Duty (SPD) was introduced in 1981 and subsequently abolished in 1982, Advance PRT (APRT) was introduced in 1980 and is now to be phased out, and the tax-free oil allowance after being halved, is now to be restored to its original level for fields granted development consent after 1 April 1982. Many more changes in the tax system have been made. By highlighting the main pressures and influences on the governmental policy process an understanding of the directions of likely pressures and the relative strength of these pressures may be acquired.

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Authors
  1. Danny Hann
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© 1986 P.D. Hann

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Hann, D. (1986). Taxation Policy. In: Government and North Sea Oil. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-08083-0_7

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