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    B553 - Ground Bill 2013, TSR Government



    Ground Act 2013

    An act to reduce the needless taxes relating to petrolium and mining.

    BE IT ENACTED by The Queen's most Excellent Majesty, by and with the advice and consent of the Commons in this present Parliament assembled, in accordance with the provisions of the Parliament Acts 1911 and 1949, and by the authority of the same, as follows:-

    1. Abolition
    (1) The petroleum revenue tax will be abolished
    (2) The aggregates levy will will be abolished

    2. Commencement, short title and extent
    (1) This Act may be cited as the Ground Act 2013
    (2) This bill shall extend to England
    (3) Shall come into force from 1st April 2014 following Royal Assent.

    Notes The Petroleum Revenue Tax is a tax of upto 50% on the revenue gained from certain oil fields. It is quite simply a tax grab by government which is overcomplicated by the fact that negotiations can take place to declare an oil field non-taxable by this measure. Abolition will likely spur investment.

    The aggregates levy is a levy of upto £2 per tonne on rock, gravel or sand and whatever occurs or is mixed with it as well as, in certain circumstances, spoil, offcuts and by-products. It raises very little revenue and essentially just exists to act as red tape.

    http://www.hmrc.gov.uk/oilandgas/guide/prt.htm http://customs.hmrc.gov.uk/channelsP...HMCE_CL_001169

    Costings...

    Petroleum revenue tax : -£2bn
    Aggregates levy: -£0.3bn

    Total: -£2.3bn

    http://www.hmrc.gov.uk/menus/pocket-guide-2012.pdf
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    Not sure how comfortable with 1. 1) I am. We should be facilitating an energy boom across all sectors but I don't see the need to ease the exploitation of fossil fuels. How often are these fields negotiated to be non taxable?
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    (Original post by Thunder and Jazz)
    Not sure how comfortable with 1. 1) I am. We should be facilitating an energy boom across all sectors but I don't see the need to ease the exploitation of fossil fuels. How often are these fields negotiated to be non taxable?
    Marginal rates on some fields can be as high as 82% (i assume that takes into account a number of other taxes as well) and i believe it is dependent on the age of the field (the two pages i linked to are bulky so i'll have a read and get back to you on that one tomorrow probably).

    May i ask, while you clearly want 'green' investment (as do i), would it not be more logical to extract what resources we can and use the corporation tax and the like to pay for 'green' measures rather than providing a disincentive to an industry which is the backbone of Scotland and provides many job opportunities, greatly enhancing the economy.
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    Unnecessary and potentially harmful taxes, aye.
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    PRT was already abolished in 1993 and only now applies to fields given development consent before that date. Therefore, PRT is not currently acting as a barrier for investment in future developments. The effect of this Bill would be to take money from Government and give it to corporations - I contend that there are better uses for it.
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    Oh. Well if miser is right then this will likely be a no.

    That logic requires an assumption that increasing out reliance on fossil fuels will go hand in hand with a surge in renewables, I fear
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    Much in agreement with Miser - abolishing PRT would simply act to reduce the wealth returned to the public from the exploitation of our natural resources. The oil industry is the wealthiest in the world, it doesn't need billions in extra profit at the expense of the British exchequer.

    As for the Aggregates Levy, my opinion is much the same. It was imposed to compensate for the environmental impacts of extraction that cannot be removed through the imposition of planning conditions; it is in effect a blunt attempt at a Pigovian tax. As such, it's removal would be a bad thing. It's also worth mentioning that it was at first a broadly revenue-neutral tax, with a large proportion of its revenue being returned to employers in the industry through a small but permanent reduction in the rate of their National Insurance surcharge. The most sensible change to make in this policy area would be to simply reinstitute the Aggregates Sustainability Fund.
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    The oil industry is booming at the moment, and has been for the last few years - so much so that there wasn't even a recession up here. The PRT doesn't harm this growth as it does not apply to new fields.

    If you want to spur investment, the best solution would be to recreate a British national oil company. This was foolishly sold off under Thatcher, and the damages of this ideologically driven decision are particularly felt in areas of the country that are currently quite economically depressed, like the north east of England and parts of northern Scotland that used to be involved with heavy and large scale fabrication of offshore structures, as well as the R&D sector. If you look at Norway and Brazil, for example, the benefits of having a national champion are extremely clear: namely, much greater investment in the local economy, across a range of functions. It's no use simply saying we can't fabricate any more because it's too expensive when many of our other European neighbours do.

    Another solution would be to better ensure that smaller, indigenous companies can get the capital they require to grow. Currently this doesn't really happen as the banks seem very scared to lend money to companies in a booming market for some reason, but alas it usually means they get gobbled up by their much bigger, and foreign, rivals. This could be quite a big problem in the future if the companies want to relocate their jobs back to their native lands.
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    (Original post by miser)
    PRT was already abolished in 1993 and only now applies to fields given development consent before that date. Therefore, PRT is not currently acting as a barrier for investment in future developments. The effect of this Bill would be to take money from Government and give it to corporations - I contend that there are better uses for it.
    Okay, thanks.

    I still have a gripe with the fact that some companies are being penalized unfairly then but i'll discuss it's continued inclusion for second reading.

    (Original post by Thunder and Jazz)
    Oh. Well if miser is right then this will likely be a no.

    That logic requires an assumption that increasing out reliance on fossil fuels will go hand in hand with a surge in renewables, I fear
    Yes, i like green technology but do not like taxing people to pay for it as such i am quite happy to extract and export vast amount of shale gas and the like and use the proceeds to invest in the 'green' industry.

    (Original post by JPKC)
    Much in agreement with Miser - abolishing PRT would simply act to reduce the wealth returned to the public from the exploitation of our natural resources. The oil industry is the wealthiest in the world, it doesn't need billions in extra profit at the expense of the British exchequer.

    As for the Aggregates Levy, my opinion is much the same. It was imposed to compensate for the environmental impacts of extraction that cannot be removed through the imposition of planning conditions; it is in effect a blunt attempt at a Pigovian tax. As such, it's removal would be a bad thing. It's also worth mentioning that it was at first a broadly revenue-neutral tax, with a large proportion of its revenue being returned to employers in the industry through a small but permanent reduction in the rate of their National Insurance surcharge. The most sensible change to make in this policy area would be to simply reinstitute the Aggregates Sustainability Fund.
    Even if it is Pigovian i am not sold that it really has a significant enough effect.

    I'll take a look at the aggregates sustainability fund for second reading.

    (Original post by Smack)
    The oil industry is booming at the moment, and has been for the last few years - so much so that there wasn't even a recession up here. The PRT doesn't harm this growth as it does not apply to new fields.

    If you want to spur investment, the best solution would be to recreate a British national oil company. This was foolishly sold off under Thatcher, and the damages of this ideologically driven decision are particularly felt in areas of the country that are currently quite economically depressed, like the north east of England and parts of northern Scotland that used to be involved with heavy and large scale fabrication of offshore structures, as well as the R&D sector. If you look at Norway and Brazil, for example, the benefits of having a national champion are extremely clear: namely, much greater investment in the local economy, across a range of functions. It's no use simply saying we can't fabricate any more because it's too expensive when many of our other European neighbours do.

    Another solution would be to better ensure that smaller, indigenous companies can get the capital they require to grow. Currently this doesn't really happen as the banks seem very scared to lend money to companies in a booming market for some reason, but alas it usually means they get gobbled up by their much bigger, and foreign, rivals. This could be quite a big problem in the future if the companies want to relocate their jobs back to their native lands.
    Aye, i'm considering finding a way to get in the industry as it seems more secure than most.

    In hindsight i actually agree. I'd have probably gone for a 55% state owned, 45% privately owned (to 1 or 2 bidders) with the privately owned companies largely managing the company. With that said the chances of me being the Tory PM who brings back a state owned company probably are not all that high,

    This is something that i will look at.
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    (Original post by Rakas21)
    Yes, i like green technology but do not like taxing people to pay for it as such i am quite happy to extract and export vast amount of shale gas and the like and use the proceeds to invest in the 'green' industry.
    Here we have one of those situations where I could post the exact same text to the post you replied to for me and it would be a valid response to this. I accept yur logic but I reject its underlying assumption. It would be grand to use oil money to fund renewables development but that doesn't seem to me like something that will happen.
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    (Original post by Thunder and Jazz)
    Here we have one of those situations where I could post the exact same text to the post you replied to for me and it would be a valid response to this. I accept yur logic but I reject its underlying assumption. It would be grand to use oil money to fund renewables development but that doesn't seem to me like something that will happen.
    Certainly it won't in real life however i still stand behind my thesis, exploit as many resources as you can, pile the revenue into a sovereign wealth fund and have a percentage released to the treasury each year which can among other things be used to fund the development of 'green' technology.
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    (Original post by Rakas21)
    Certainly it won't in real life however i still stand behind my thesis, exploit as many resources as you can, pile the revenue into a sovereign wealth fund and have a percentage released to the treasury each year which can among other things be used to fund the development of 'green' technology.
    One can dream, I suppose. I am in the Greens after all.
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    Looking back now, Thatcher should have definitley held onto state oil
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    (Original post by Rakas21)
    Aye, i'm considering finding a way to get in the industry as it seems more secure than most.

    In hindsight i actually agree. I'd have probably gone for a 55% state owned, 45% privately owned (to 1 or 2 bidders) with the privately owned companies largely managing the company. With that said the chances of me being the Tory PM who brings back a state owned company probably are not all that high,

    This is something that i will look at.
    Something like a British version of Statoil would be perfect. Statoil acts as a national champion for Norwegian technology and services firms and the boost this provides to Norwegian industry is very clear.

    At the moment there are only a few British services companies, and they only exist in one sector (engineering & project management). Granted, they're world leading in this area, but it would be preferable if British firms had strongholds in other areas of the market as well, particularly areas that actually manufacture a physical product of some sort.

    As the UK's oil output gradually declines, the oil services market will be much more important to the UK. Having operated in the harsh North Sea since the 70s, we've acquired a huge amount of knowledge and skills which should put us in a leading position in certain areas. And we are, but none of the companies are British! This means that we're going to be vulnerable to these companies wanting to pull out once the North Sea is no longer worth their time. American companies will still have research and operating centres in Texas once the GuM is dry, likewise for the Norwegians... but the same is unlikely to be true for Britain.

    Another worry is that with China soon about to become (or maybe it already is) the biggest oil producer in the UKCS, they'll pull in their own services companies rather than use possibly more expensive Western ones.
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