CBI urges chancellor to rethink oil industry tax

Chancellor George Osborne has been urged to scrap plans to introduce a higher tax on the gas and oil industry by the Confederation of British Industry (CBI).

As part of the chancellor's budget in March he revealed the introduction of a supplementary tax charge on the gas and oil industry, raising the amount of tax the sector pays from 20 per cent to 32 per cent.

The tax hike was created to fund the cut in fuel duty and ease the burden on consumers as a result of rising oil prices.

However, there has since been an outcry from the oil industry and a letter from the CBI, Britain's largest lobby group, to the government last month, urged Mr Osborne to rethink his plans.

In extracts of the letter published by the Financial Times, director general of the CBI John Cridland warned that the tax had created fiscal uncertainty.

"As you know, companies have global opportunities for investment and I believe the tax, together with the restriction on decommissioning relief, will weaken investment in North Sea energy production," he said.