Thursday, January 24, 2008

Windfall taxes

Dizzy is reporting and Early Day Motion signed by Abbott, Corbyn et al calling on the Government to introduce a one-off windfall tax on energy company profit in order to fund an increase in the winter fuel payment that the oldies get. His objection is that we pay these winter fuel allowances to people in warmer climates, which is fair enough.

I have two objections: firstly, it is impossible for companies to plan investments if they think a capricious government will just dip in to their profits when times are good.

Secondly, this is not a 2-way street companies that hit a a bad time don't get the money back in the form of a windfall tax credit.

As I commented on Dizzy's site, I am reminded of a story that was told to me in the mid 90's. When the mobile operator that is now T-Mobile was building its network, a very expensive undertaking, one of its employees asked the CEO at an open meeting if there would be a profit sharing scheme? His response was that only when the employees sign up to a loss sharing scheme.

1 comment:

Mark Wadsworth said...

Agreed. I have commented at Dizzy's.