By John Pickard
Only now, a week after the general election, is it being revealed that the giant Shell oil company paid zero corporation taxes last year.
According to the Financial Times today (December 18), the company was able to offset its profits of $731m against the expenses of plugging and abandoning wells and removing equipment. Not content with getting tax-payers subsidies to put in the investment in the first place, then fleecing the taxpayer for decades by the extraction process itself, the oil companies are being paid by the tax-payer to wind down their operations. This is all highly legal, of course…the oil companies dictate the fiscal and legal framework they wish to operate within and governments duly oblige.
In recent years Shell has relocated its international headquarters from London to The Hague, not because of better office or transport facilities in the Dutch capital, but because the government of the Netherlands is also extremely generous with its subsidies and tax breaks. Globally in 2018, Shell made over $36bn in profit and it paid $10bn in corporation tax…only none of it in the UK.
€6.2m in subsidies for Big Oil every single day.
Like other energy corporations, Shell can claim tax relief for decommissioning facilities, not only from current profits, but even from duties previously paid. A campaign manager at Global Witness, said, “The fact that Shell and other major oil companies are getting huge tax rebates, despite making vast profits, is a feature that is now baked into the UK oil and gas tax system.”
In fact, the oil majors get hand-out from all over the place. According to an article on the Global Witness website, between 2013 and 2018, fossil fuel companies received the equivalent of €6.2m in subsidies from the European Investment Bank, every single day.
There is an important lesson in this for Labour Party members. The Labour manifesto called the general election, among other things, “the fairer tax election”. It went on to promise that Labour would rebuild our public services by “taxing those at the top”. Corporate tax-dodgers, the manifesto said, “have had a free ride for too long.”
When the billionaire-owned media fought so viciously and bitterly against the Labour Party, it was precisely because it was offering for the first time in decades a programme that threatened the vital interests of big business.
Specifically in relation to the oil sector, Labour promised that “We will introduce a windfall tax on oil companies so that the companies that knowingly damaged our climate will help recover the costs. We will provide a strategy to safeguard the people, jobs and skills that depend on the offshore oil and gas industry.”
For big business and the rich, taxes are optional
Issues like this are still very much alive, even though we lost the election. The reason why these things were in Labour’s manifesto is because they articulate the anger and resentment in broad layers of the population about the growing disparity in wealth and income between those at the top – and we are talking about a tiny, tiny percentage of the population – and the majority of us below. For the rich, super-rich and big business taxation has become optional.
We need to argue for the defence of Labour’s manifesto, as the most radical in two generations. Better still, we should argue for the public ownership of the giant oil corporations and what remains of their facilities, so that their resources, manpower and reservoir of skills can be integrated into a planned energy strategy that would lead us away from a reliance on fossil fuel towards renewable energy production.
Labour’s right-wing are now trying to push the clock back and to excise any traces of radicalism from the party’s policy and programme. We should ask questions of the right-wing when these issues come up in Labour Party meetings. Questions like ‘what parts of the manifesto would you drop?’. And when it comes to the taxes of oil companies, whose side are you on? The Shell Oil company, or ours?
December 18, 2019
