The Chief Executive of BG Group PLC, Frank Chapman last week joined the chorus of voices condemning the UK Chancellor, Gordon Brown's plans to introduce a 10% tax increase on profits from North Sea oil and gas fields.
Speaking to the AFX news agency, Mr Chapman slammed the tax hike as 'unexpected and unwelcome', and announced that the changes are likely to increase the group's effective tax rate from a level of 34.5% in the first quarter of this year to 40% over the year.
This echoes comments made by the Chief Executive of BP, Lord Browne, earlier this month. Speaking to the Independent newspaper, Lord Browne expressed a desire to see the tax increase reversed, and warned that the measure would mean that oil and gas companies will reduce investment in the North Sea.
BP wrote to the Chancellor and the Secretary of State for Trade and Industry, Patricia Hewitt, at the beginning of May, asking them to reconsider the profits tax increase. Failing that, the oil company proposed that the scrapping of a levy on North Sea oil production, which Gordon Brown announced in April would be put out for consultation, should be immediately implemented.
'I don't see why there should be consultation on the issue of royalties when there was no consultation on tax,' Lord Browne observed at the time.
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