Where’s the windfall profit for a tax?

A windfall profit tax on oil companies now would be illogical and an unwise economic measure. The rationale for such a tax is suspect and can be challenged in the Courts. Those arguing in favour should look at the experience of other countries that have imposed such a tax , specifically the US, where it did more harm than good to the economy, says Raghuvir Srinivasan.

What is a windfall profit?
According to Wikipedia, the term “windfall profit” was first used in the colonial era. Subjects were prohibited from using lumber that was more than a foot in width except where due to an act of God, such as a storm, trees fell down in their own property. In such a case, they could use the wood or sell it. Needless to say, there were several such instances of acts of God and subjects reaped windfall profits by selling such wood. So, a windfall profit presupposes an act of God. It is profit earned through other than the ordinary course of business. Does this definition fit our oil companies? It appears not.

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