LONDON: British finance minister George Osborne on Wednesday lifted the rate of tax on companies operating in the North Sea to enable lower petrol prices for motorists hit by soaring oil costs.
"From tomorrow, the supplementary charge levied on oil and gas production will increase from 20 percent to 32 percent," Chancellor of the Exchequer Osborne told parliament in his annual 2011-12 budget.
"Even after this, profits on a barrel of oil are forecast to be higher in the next five years than in the last five years."
Osborne said the move would raise an additional £2 billion ($3.3 billion, 2.3 billion euros) for the state coffers.
The budget was delivered one day after data showed that annual inflation surged to a two-year peak of 4.4 percent in February, driven partly by record prices for diesel and petrol (gasoline).
Oil prices have hit two-year highs above $100 a barrel owing to unrest in North Africa and the Middle East.
Osborne meanwhile said the North Sea tax hike would be flexible and allow for heavy falls in the price of crude oil.
"I don't want important investment on the North Sea lost. So if the oil price sustains a fall below $75 ... we will reintroduce the escalator and reduce the new oil tax in proportion.
"That is how it will work -- no escalator when the oil price is high -- no extra tax on the profits of North Sea oil profits if the price falls or stays low -- that's the fair fuel stabiliser.
"This is a result for Britain's hard-pressed families. I've made sure that there will be no fuel duty rise this year, I've cancelled the fuel duty escalator when the oil price is high," Osborne added.
The chancellor also announced plans to cut British fuel duty in a further move aimed at reducing motorists' costs.
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