Analysis

The SNP is on the wrong side of a windfall tax

by | 22 Feb 2024

The SNP leadership has decided to go all-in with the oil industry. It seems to think this cynical electioneering will have no consequences. They're probably wrong.

First published by The National

So a 75 per cent windfall tax on oil company profits is absolutely fine and will have no adverse impact in Scotland but a 78 per cent windfall tax will cost 100,000 jobs? Seriously? Does that make sense to you?

If politicians want to bring change they need the trust of the public. If you want big change you need big trust. Since there is no bigger change than independence, telling voters things that clearly don’t make sense is a terrible idea. This was my immediate thought when the SNP leadership performed a unilateral u-turn on oil taxation, creating a muddled and incoherence position. I don’t think this is electorally clever.

The SNP’s position on oil and gas has been a little bit muddled for a while now. The Scottish Government has wanted to be seen to be at the forefront on climate change politics but has never had a credible climate change policy. At the same time it wants to protect its electoral stronghold in the North East. On top of this the oil lobbyists are one of the most powerful army of commercial lobbyists in Scotland and kick governments around for fun, often with the compliance of the media (the oil industry is one of the biggest purchasers of media advertising in the world).

Yes, that is difficult territory to navigate, but it only makes it more important that you do so with care. The current SNP position on a windfall tax is not achieving that and does not seem thought through. The SNP has long supported a 75 per cent windfall tax on oil corporations’ profits, and so it should; its not only that the oil industry is ridiculously profitable, its that the oil industry more than anyone else is behind the current cost of living crisis.

It doesn’t get more expensive to extract and process oil and gas in a crisis, it just makes it easier to inflate prices. That’s what happened. About 60 per cent of the cost rises you are seeing in the shops is down to pure corporate profiteering and only about 40 per cent is because of rising costs.

And by far the most important element in those rising costs are rising energy costs. Those in turn are the result of corporate profiteering on the back of a very short-term snarl up in global energy supply chains during Covid. As a result, the energy corporations have been making stupendous profits, almost entirely at our expense.

The SNP is fighting more marginal seats in the central belt where the votes of young people could be make-or-break than it is in the North East where oil industry votes might make the difference

That’s what a windfall tax is for – to rebalance corporate profiteering with the public good by taking unearned profits from corporations and using them to benefit citizens. We should be supporting this wholeheartedly. Last week the SNP did.

Then a north-east newspaper ran an oil industry hit job on its front page in the opening salvo in a campaign against a windfall tax. So this weekend the SNP leadership judged that a unilateral u-turn would be clever. It doesn’t look like that to me.

The new SNP position is that it supports 75 of the pennies out of Labour’s proposal to charge 78 pennies in the pound in a windfall tax, but it does not support the remaining three pennies. This, it claims, is because 100,000 jobs will be put at risk. But let’s be honest; when did Scotland’s oil industry not tell us that 100,000 jobs were at risk if we didn’t do exactly what it asked?

The SNP position doesn’t really make sense, so to try and make it make sense it gets even more tangled up in even less persuasive arguments. It would be in favour of those three extra pennies if it was its money, but not if it is Westminster’s money. Except the other 75 pennies are Westminster’s money and it doesn’t object to them. And all of corporation tax goes to Westminster – does that mean the SNP now doesn’t support corporation tax?

The problem with this kind of electoral politics is that it is very risky and has unintended consequences. The SNP is fighting more marginal seats in the central belt where the votes of young people could be make-or-break than it is in the North East where oil industry votes might make the difference. It is a myth to believe you can just ‘bribe’ everyone into voting for you.

That’s why you should keep a close eye on your principles when you engage in electoral politics. If you gain one seat by being cynical but lose much wider public trust in the process, the net result is a loss. Over the last two years the oil corporations have screwed us over royally. All of us. Everyone in the world. Their profits are eye-watering and a fair share of those profits are needed to sustain creaking public services. It is that simple.

The SNP should be on the side of Scotland’s citizens during a cost of living crisis, not the oil industry.

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