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Norton has to consult AFC before pronouncing on taxing oil companies
Kaieteur News – Governments in the United States and other oil producing countries around the world have moved to induce a one-off tax for such companies that have been operating and enjoying increased profits as the cost for oil continues to surge on the global market, largely owing to the war between Russia and Ukraine.
Locally, Vice President Bharrat Jagdeo has confirmed that it is the citizens that forced those countries to slap the one-off taxes on those companies, arguing that this could not be replicated in Guyana since, “we are bound by a PSA (Production Sharing Agreement) with very specific terms on the taxation side.”
Opposition Leader, Aubrey Norton speaking at his press conference on Tuesday.
Leader of the Opposition, Aubrey Norton on the other hand could not definitely say whether he agrees with this policy for the oil companies operating in Guyana, since he must first consult with the Alliance For Change (AFC) on this.
On Tuesday, during the Opposition Leader’s weekly press conference, he was asked by this newspaper to weigh-in on this important fiscal strategy, which could rake in more revenue for Guyana.
According to him, “The government had a glorious opportunity to improve or to work to get more for Guyana. They didn’t utilise that opportunity. My own view is that they should have and they didn’t and if they didn’t, I don’t see them increasing any taxes, etcetera.”
The Opposition Leader was referring to the Liza One Permit renewal, in which experts had advised Guyana to use to get better value for its oil. After explaining that government missed a chance in keeping with the contract to get a better deal, he shared, “there is a lot of space for the government to act to ensure that we benefit more”.
When Norton was pressed by this newspaper to say whether the party supports the one-off tax as instituted in other countries, Norton said, “I believe essentially that the coalition has to review the present situation and then make its position clear. In the PNC, we have a group that is looking at oil, we will engage the AFC and then the APNU+AFC will make a clear pronouncement on the policies and approaches we intend to implement as it relates to the oil and gas sector.”
The United Kingdom recently slapped its oil companies with a one-off windfall tax of 25 percent on all oil companies operating in that jurisdiction in order to also partake in the sweeping profits being had by the operators as a result of the escalating oil price.
Notable, the US is seeking to move in this direction as well, having already hiked its royalty payable by oil companies there to above the 18.75 percent in December last.
Democratic Congressman from the State of California, in the US, Adam Schiff announced two weeks ago that the new legislation to lower gas prices and to bring immediate relief to Americans struggling to pay the out-of-control prices at the pump by instituting a suspension of the federal gas tax.
Schiff, at a press conference to announce the move, said that “for months now, a combination of Vladimir Putin’s invasion of Ukraine, ongoing supply chain issues, and price gouging by the oil companies have been steadily driving up the price of gasoline to more than US$4.50 a gallon nationwide and more than US$6 a gallon here in Los Angeles.”
According to Schiff, “in spite of this volatility, one thing has remained the same: Big Oil’s skyrocketing profits.”
He posited, “this is exploitation, plain and simple, and it’s unacceptable to all of the people who are having to spend hundreds of dollars more every month just to go about their daily lives, at a time when so many are already struggling to make ends meet.”
The proposed legislation, namely the Federal Gas Tax Suspension and Windfall Profits Tax Act, would suspend the federal gas tax – which currently stands at 18.3 cents per gallon – through December 31, 2023.
It was noted that to ensure the Highway Trust Fund is still robustly funded, the suspension would be paid for through a new 50 percent tax on Big Oil’s windfall profits.
According to Schiff, “we can help bring down the cost of oil by suspending the gas tax and paying for it with a windfall profits tax on oil companies.”
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