Pres. Biden warns Exxon to pay fair share of taxes
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– Meanwhile Guyana Govt. goes to court to ensure oil company gets tax free ride
Kaieteur News – US President, Joe Biden on Friday last, lambasted ExxonMobil Corporation, his country’s largest oil and gas producer, for not assisting with easing supply shortages which have unleashed economic pains on the pockets of American citizens. Instead, Biden said Exxon is comfortably taking advantage of the supply crisis to make soaring profits for its shareholders.
US President, Joe Biden
Biden said Exxon actually “made more money than God this year” and warned that the multinational must pay its fair share of taxes.
Interestingly, that call by the American leader is in direct contrast to the Government of Guyana which supports nonpayment of taxes by ExxonMobil no matter how much money it makes off the nation’s Stabroek Block resources. The Government has often preached that Guyana has to maintain the sanctity of the 2016 Stabroek Block Agreement which gives Exxon and fellow contractors a tax free ride while affiliated companies, subcontractors, and expatriate employees get massive tax concessions and waivers.
In fact, in a case now going through the High Court, the government of Guyana and Exxon find themselves on the same side opposing a citizen’s action asking the court to declare whether it is lawful for Exxon not to pay taxes in Guyana.
In an invited comment, Chartered Accountant, Christopher Ram opined that the situation described above represents one of the greatest economic ironies of all time.
Attorney-at-Law and Chartered Accountant, Christopher Ram
What is even more damning, he said, is the fact that Exxon has full licence to exploit Guyana’s patrimony, desecrate the environment, make as much profits it wants and pay no taxes in Guyana.
He said, “But it is still worse than that. The 2016 Petroleum Agreement reduces our Minister of Natural Resources to a messenger boy. Exxon makes a ton of money, calculates the taxes payable, hands its tax returns to the Minister and he takes it to the Guyana Revenue Authority (GRA)and says, ‘Don’t worry, I am paying the taxes for them. Gross up the income as well as the tax and give me a receipt in the form of a Certificate of tax paid in the name of Exxon.’ Exxon will then take that certificate and present it to the IRS (Internal Revenue Service) to show that it has paid taxes in Guyana.”
The Chartered Accountant noted, however, that while the certificate is issued by a state agency, it is in reality “a fake, a scam and it is probably a fraud.”
Ram said it is doubtful that Biden knows the whole truth of Exxon’s greed and the act it is performing on his IRS.
On Saturday Kaieteur News reported that Biden sternly criticised the posture of the oil company as he said it was reflective of sheer greed. Biden said the company sits back and watches inflation rise in-country, much to the benefit of its shareholders’ pockets.
Expounding on the inflationary pressures facing his people, Biden blamed Russian President Vladimir Putin and his invasion of Ukraine which led to shortages in the market and record-high gasoline prices. He also pinned part of the blame for high fuel costs on Exxon and other oil producers for what he called a failure to increase supply to help reduce prices.
“One thing I want to say about the oil companies: They have 9,000 permits to drill. They’re not drilling,” he continued. “Why aren’t they drilling? Cause they make more money not producing more oil — the price goes up.”
The second “reason they’re not drilling is they’re buying back their own stock,” Biden said. “Buying back their own stock and making no new investments.”
Exxon, the top U.S. oil producer, announced in April that it intends to triple the size of its stock buyback programme and repurchase up to US$30 billion in shares by the end of next year.
According to CNBC, in the first three months of 2022, Exxon distributed US$5.8 billion to shareholders, including US$3.8 billion in dividends and US$2.1 billion in stock buybacks. Given these figures, Biden issued a specific directive to the petroleum producer: “Exxon: Start investing, start paying your taxes.”
Exxon has of course objected to the president’s accusations. Industry stakeholders now wonder what Biden’s reaction would be if he knew the advantage Exxon was taking on Guyana.