Times must be tough for the trillion dollar global oil industry that yesterday got what they wanted in Parliament and received another extension to their multi-million dollar tax break. What’s next? Community bake sales for deep sea drilling rigs?
Yesterday, the Government introduced the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill, an innocuous sounding bill that extends the tax exemption for non-resident oil rig and seismic vessel operators. It is a ‘Tax Breaks for Fossil Fuels’ bill, plain and simple, and yet another example of the National Government bending over backwards for big oil.
Kiwi companies and workers have to pay tax but not offshore oil companies. It defies economic logic that one of the most profitable industries in the world is getting tax breaks from our Government.
WWF estimates the cost of this extended tax break to be worth around $5m a year and when you add it to the $40m of other fossil fuel tax breaks, and $25m of free seismic surveys, the oil industry is getting a very, very good deal from the taxpayer.
Interestingly, Treasury opposes this tax break extension as does the OECD. The latest OECD country report says, “tax concessions distort investment decisions in favour of fossil fuel production over more sustainable sources of growth and counteract New Zealand’s efforts to address global climate change and should thus be discontinued.” Treasury opposes the exemption on the grounds of it setting an unwanted precedent.
Globally public fossil fuel subsidies like these incentivise investment in dirty energy that’s contributing to climate change and harming our kid’s futures.
The National Government can still stop its multimillion dollar tax breaks to the oil and gas industry and use the money saved to support the transition to clean energy.