To ask the Chancellor of the Exchequer what assessment his Department has made of the likely effect of Budget changes to petroleum revenue tax on exploration activity in the North sea; and what assessment his Department has made of the likely effect on offshore investment of the changes announced in both petroleum revenue tax and advance corporation tax.
§ Mr. Dorrell
[holding answer 25 March 1993]: Doubling the marginal rate of return should encourage investment in, and extend the life of, existing PRT-paying fields. For the future, finding and producing oil will be taken completely out of PRT. As with any tax cut, that will both increase after-tax costs and increase after-tax profits that would have been subject to PRT. Commercially viable exploration should continue unaffected, except by the greater scope for companies to benefit from success.