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BP oil spill costs give estimated $10 billion tax break

BP Spill Tax breaks 2010

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#1 Palisades

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Posted 12 July 2010 - 08:58 PM

http://www.ft.com/cm...html?ftcamp=rss

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If BP manages to seal the leaking well as planned by August, analysts have estimated that its total spending in the Gulf region could be about $30bn. That would represent about $10bn of clean-up costs and $20bn compensation for losses suffered by fishing, tourist and other industries, covered by the fund agreed with the US administration last month.

With a tax rate on profits of 33 per cent in a typical year, that would cut BP’s tax bill by about $10bn.

BP paid $8.4bn in worldwide tax on profits last year, down from $12.6bn in 2008 because of the fall in oil and gas prices.

Of that 2009 payment, £930m went to the British government: about as much as is paid by the UK’s entire transport and communications industries.

The company does not give a full geographic breakdown of its taxes, but its payments to the US are likely to have been of a similar size.

Irene Himona, an analyst at Exane BNP Paribas, estimated that before the Deepwater Horizon accident, BP was set to pay about $37.5bn in tax during 2010-13, but the costs of the disaster would cut that to $27bn.

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#2 Rhys

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Posted 12 July 2010 - 09:33 PM

Makes sense.  Corporations pay tax on profits, and this cuts into their profits.  It's the same as if they spent it on salaries or advertising.

Now, that $20bn compensation is an additional amount they're paying out of pocket at no business benefit...
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#3 Palisades

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Posted 12 July 2010 - 09:38 PM

^ Oh, I'm aware of the logic for it. It's annoying nonetheless. BP's basically shoving off a portion of the cleanup costs onto taxpayers.
"When the Fed is the bartender everybody drinks until they fall down." —Paul McCulley

"In truth, 'too big to fail' is not the worst thing we should fear – our financial institutions are now on their way to becoming 'too big to save'." —Simon Johnson

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TWP / An Affirming Flame / Solar Wind / Palisade



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