Deepwater Horizon Settlement Gives BP Billions in Tax Breaks
Deepwater Horizon Settlement Gives BP Billions in Tax Breaks © Flickr/ EPI2oh
05:41 06.04.2016(updated 05:42 06.04.2016) Get short URL
A US judge on Monday approved an estimated $20 billion settlement by BP Oil over the catastrophic 2010 Deepwater Horizon spill of hundreds of millions of gallons of crude oil in the Gulf of Mexico.
Environmental activists, Gulf coast residents and politicians who have been fighting since that time for a just settlement are not happy with the outcome, stating that much of the fine will be a tax-deductible expense for the oil giant.
US tax code allows businesses to write off damages, even punitive ones, as a business expense. Restitution and other remedial payments are fully deductible as well.
Only $5.5 billion is indicated as a penalty under the Clean Water Act in the Deepwater Horizon settlement and is therefore explicitly nondeductible. As for the additional billions, intended to cover massive environmental damage, ecological restoration and many other claims by the five Gulf states and local governments; BP can consider it a simple cost of doing business.
The company behind the worst maritime oil spill in history will ultimately pay only a fraction of the total sum, and American taxpayers will be left with a majority of the cost. Several public figures, including politicians, expressed their disappointment that the settlement didn’t go further, explicitly blocking BP from claiming any deductions.
Democratic Presidential hopeful, Vermont Senator Bernie Sanders, criticized the court’s decision via his Twitter account:
“We are saddened to learn that the gross negligence of BP continues to enjoy taxpayer subsidies,” said Lukas Ross, climate and energy campaigner with the environmental group Friends of the Earth. “Treating the worst oil spill in US history as an ordinary and necessary business expense boggles the mind.”
Friends of the Earth noted that BP has already received millions of dollars in tax breaks for oil spill cleanup deductions.
Since the catastrophe, the oil giant has expanded its operations in the Gulf of Mexico, the Atlantic reported in 2014.