Yesterday we said that someone, somewhere, was going to complain about the manner in which oil companies only pay profits tax on the profits they actually make. They’ll do so out of ignorance of course, just an inability to understand this real world out here. So, guess what, Owen Jones, bless his little cotton socks, has leapt in to do exactly what we said some ignorant would do:
Yet the need to stuff the government’s maw with revenue means that that’s not quite how we’ve taxed these companies over the decades. We’ve looked at the costs and revenues per year, not over that entire lifecycle. Now those end of life costs are coming due and sure, companies can count them as costs and deduct them in the calculation of what profits they’re making which can be then taxed.
That’s all these “tax credits” are. Just another cost which is deducted from revenue before profits, thus profits tax, are calculated. Further, we can’t actually have a tax system that works any other way. Well, not a fair nor efficient one at least.
There will, of course, be cries to the Heavens about these subsidies to the capitalists who’ve been raping Gaia and all that. Yet all that is happening is that costs are being deducted from revenues before profits are calculated to be taxed. Given that this is how we work out what are profits that are then taxed why the complaining?
And now Owen:
The “free market” is a creed that stirs up near religious devotion among its believers. It is in fact a con, a myth, a great deception. Take the latest striking example: according to the National Audit Office, British taxpayers are expected to cough up £24bn for tax relief given to oil and gas corporations, for the removal of North Sea wells, rigs and pipelines. Better start saving up, because if the companies suddenly go under, that bill will only increase. Indeed, some companies have already defaulted on the costs of decommissioning, leaving you and I to pay millions of pounds.
Many questions arise here. While Britain’s Tory government frittered away its North Sea oil wealth, Norway invested the proceeds into a sovereign wealth fund which is now worth $1tn. We could have saved up the wealth to invest in the country’s future – what a tragic waste. It is also a damning indictment that we are splashing out on tax breaks for big oil rather than properly investing in tackling the existential crisis of climate change, and in doing so, creating vast numbers of jobs in renewable energy as Germany has done.
But it is yet another example of socialism for the rich, capitalism for everyone else. Britain’s private sector is utterly dependent on state largesse to make money.
Levying a profit tax only upon profits is not state largesse allowing those profits to be made.
We do enjoy saying we told you so, we did tell you, he at least did, we’re telling you we told you so. But then finding Owen Jones in error about reality is hardly setting ourselves a high hurdle to clear now, is it?