Major tax cuts for Scotland’s oil and gas industry has been announced by the Chancellor in his Budget on Wednesday.
George Osborne unveiled that he would effectively abolish petroleum revenue tax and halve the rate of supplementary oil and gas charges from 20% to 10%. The North Sea industries have been struggling due to the recent fall in the price of oil and gas.
The Chancellor was also forced to revise down his estimate for UK economic growth from 2.4% to 2%, the Office of Budget Responsibility (OBR) has also downgraded their forecasts for a further four years.
Osborne said: “We are only able to provide this kind of support to our oil and gas industry because of the broad shoulders of the United Kingdom.”
Edinburgh and the South East of Scotland is also set to be the next UK city to receive a ‘city deal’.
City of Edinburgh council leader Andrew Burns said: ‘‘We are delighted with the Chancellor’s pledge to develop a City Deal for our region and welcome the opportunity to continue our engagement with both the UK and Scottish Governments.
The Budget also showed there would be a further £3.5bn of government spending cuts by 2020. These extra cuts are in large part due to the decreasing growth levels.
Market worries have also forced the Chancellor to accept the OBR’s revised estimates on the fiscal deficit, national debt and borrowing.
The OBR are now forecasting debt as a percentage of GDP from 81.7% to 82.6% in 2016-17. It is also revising up UK Government borrowing from its earlier estimate of £49.9bn to £55.5bn in this fiscal year.
The Chancellor said: “We have a choice. We can choose to add to the risk and uncertainty, or we can be a force for stability.
“In this Budget we choose to put stability first. Britain can choose, as others are, short-term fixes and more stimulus. Or we can lead the world with long-term solutions to long-term problems.
“In this Budget we choose the long term. We choose to put the next generation first. Sound public finances to deliver security, lower taxes on business and enterprise to create jobs, reform to improve schools, investment to build homes and infrastructure – because we know that’s the only way to deliver real opportunity and social mobility.”
Despite the UK’s deficit forecast to be 2.9% in 2017-18, the Chancellor still believes that the UK will be in a budget surplus by the end of the decade. Osborne stated that he is expecting a surplus of £10bn in 2020.
In a surprise climbdown the Chancellor also scrapped his rumoured 2p fuel duty rise after widespread opposition from Tory backbenchers. The level will be frozen for the sixth year in a row.
Corporation tax is also set to be cut further. The Chancellor promised that he will cut the rate down to 17% by 2020.
Scotland’s whisky industry will see their excise duty frozen despite fears that it would rise in this budget.