An Aberdeen MP has insisted now is “precisely the time” to be calling for tax cuts – despite the fall in Treasury receipts from the oil and gas industry amid the downturn.
Callum McCaig admitted it might seem “slightly perverse” to be asking for tax breaks for companies which are not turning a profit.
But he underlined the benefit that would be felt in the wider economy and also highlighted the currently minimal cost to the UK Treasury of introducing such a policy.
Speaking in a debate at Westminster on the North Sea, the Aberdeen South MP said: “It may seem slightly perverse at a time when companies are not making profits, and when taxes are not flowing into the Treasury that we should be calling for tax cuts.
“But I think it is precisely at this time when we need to be calling for these tax cuts.
“And it’s at this time when those tax cuts will not come at great expense to the Treasury. It is going to cost them little to do it now.
“But the benefit of doing it will be felt in the wider economy. It would support jobs, employment and unlock the finance that will drive the innovation that will support our supply chain.”
He said a reduction in the headline tax rate would have the single biggest impact and could be the difference between a company deciding whether or not to proceed with a project.
Aberdeen North MP Kirsty Blackman flagged up the reluctance of banks to lend to oil companies.
She also called on the chancellor to look at the supplementary charge and late life asset tax regime to enable easier transfer to smaller companies in a position to get the full life out of them.
Tory MP Peter Aldous called for a taxation framework that would inspire confidence in the industry’s future and help attract global investment, including a government loan guarantee scheme to increase access to finance.
He added: “The industry is currently facing extreme challenges, but it can play a key role for the next 35 years.”
To enable it to do so, Mr Aldous said three ingredients were required – the right regulatory framework, the right fiscal framework and a “spirit of collaboration”.