The Scottish government has no plans to increase the overall tax levy on North Sea oil and gas output should it win next year’s vote on independence and would hold talks with the industry before making any changes to rates.
The country’s oil and gas reserves are a “premium advantage” and would offer an independent Scotland greater choice and a chance to strengthen its economy, the government in Edinburgh said in a report published today.
“Stability and predictability will underpin the taxation and regulatory regime for oil and gas production in an independent Scotland,” Scottish First Minister Alex Salmond said in an e-mailed statement. “We will ensure this valuable human and natural resource can strengthen Scotland’s economic fortunes and enhance the prosperity of the people of Scotland.”
Money from hydrocarbons is at the heart of the debate over whether Scotland would be better off economically by breaking away from the rest of the U.K. The latest opinion polls show supporters of Salmond’s campaign for independence lagging behind those in favor of the status quo by more than 20 percentage points ahead of the Sept. 18, 2014, referendum.
The Scottish semi-autonomous government wants to use the revenue to set up an oil fund similar to Norway’s, now the largest sovereign wealth fund in the world.
The central forecast by the Office for Budget Responsibility, set up by the U.K. government in London, for North Sea oil and tax revenue between the fiscal years ending in 2019 and 2041 is 56 billion pounds ($86 billion) compared with 26.7 billion pounds during the next five years.
The longer-term forecast assumes output falling at 5 percent a year, compared with 7 percent a year since 1999, and oil prices rising 2 percent a year.
The Scottish government says that’s too pessimistic with more than half the wholesale value still to be extracted. Its central forecast for revenue until 2018 is 41.2 billion pounds, based on production increasing on the back of higher investment and oil prices remaining at last year’s average.
Scotland said today it would give greater clarity to the industry than the U.K. is providing on tax relief for the decommissioning of oil fields that have ceased production.