BRITAIN GAINS FROM OIL PRICE, WAR PAYMENTS
The British government is reaping unexpected, but welcome, net cash profits from the Gulf war, thanks to higher oil prices and the new offset payments from Germany. Higher taxes from oil companies in Britain's North Sea ($3.5 billion), plus German contributions (about $500 million), now more than compensate even the official figures for Britain's war outlays in the Gulf.Skip to next paragraph
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The British Department of Defense stated Jan. 31 that the ``total full operating cost through Jan. 30'' of the war through last week was L 1 billion. Defense officials add to this some L 100 million more for lost equipment and spent ammunition, a claimed total of US$2.1 billion.
Extra tax revenus have been large and are still growing, thanks to crisis-induced higher oil prices. The accumulated windfall from oil taxes and royalties, since early August, is at least $3.5 billion. The rate has slowed; the daily windfall was some $29 million in October, when oil prices peaked, but currently is still $10 million per day in spite of relatively depressed prices.
The German government Jan. 31 announced a grant of ``800 million marks plus additional war materiel,'' so that Britain's war coffers are now more than overfilled.
The British government profits especially from high oil prices, because the marginal tax rate on oil companies in the North Sea is 85-plus percent.
Britian's ``war profits'' are not yet declared; the British embassy in Washington ``didn't know and could not comment.'' Nonetheless, the oil companies are accruing the liabilities, and the cash begins to flow into the Exchequer late in February or early March.
Total receipts - taxes plus German grants - now aggregate more than $4 billion, twice the official war costs and possibly three times the real cash costs.