'Wind­fall' still tax­ing

Finweek English Edition - - The Company You Keep -

HERE WE GO AGAIN – part two. You may re­mem­ber that a cou­ple of years ago the ig­no­rant and greedy were call­ing for a “wind­fall tax” to be levied on, specif­i­cally, Sa­sol for dar­ing to make big prof­its out of the high oil price. For­tu­nately, that threat was beaten off. But those who be­lieve that only SA is ca­pa­ble of such folly should note the idea has now sur­faced in both Bri­tain and the United States.

So far it looks as if in Bri­tain the idea, floated by el­e­ments of the Labour gov­ern­ment, has been shot down, not least by the ar­gu­ment that if you tax wind­fall prof­its you must com­pen­sate com­pa­nies that suf­fer wind­fall losses. No gov­ern­ment would dare to ad­vo­cate that, though it seems to have es­caped no­tice that the North­ern Rock bailout was re­ally just that.

The dif­fer­ence is that North­ern Rock’s fool­ish lenders and bor­row­ers are not face­less fi­nan­cial in­sti­tu­tions but vot­ers in num­bers no gov­ern­ment – least of all this crum­bling band of Brown – could risk alien­at­ing.

It’s also been pointed out that tax­ing oil com­pa­nies more heav­ily will only spur them to step up their fren­zied ef­forts to back­track on prom­ises to in­vest in al­ter­na­tive and re­new­able en­ergy.

Be that as it may, con­ta­gion has now spread to the US, where the oth­er­wise sen­si­ble Barack Obama has pledged to im­pose a wind­fall tax on oil com­pany prof­its to be passed on as a US$1 000 per fam­ily tax re­bate. It’s al­most enough to make one vote Repub­li­can. I re­peat, though, only “al­most” enough.

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