Global business is facing a crisis in the energy sector around the world. This has been highlighted by the article; Windfall Taxes on Energy Are All the Rage They Shouldn’t Be from the Bloomberg Business Week, November 7, 2022 pages 1-2. As such, the editors expound that the Russian invasion of Ukraine has led to governments from Europe to the United States grappling with energy alternatives due to its scarcity.
Summary of the Article
Consequently, measures such as price regulations, consumer subsidies, and ad hoc nationalization have been implemented globally. While such measures seem to be remedial, they have adverse negative impacts hence various countries have resorted to windfall taxes as a solution (Bloomberg, 2022). Therefore, these are levies that are imposed on companies benefiting from energy revenues by governments who then use the taxes to help ailing businesses and consumers. For instance, the EU has enacted a 33% tax on gas and oil companies on surplus profits (Bloomberg, 2022). Further, it aims to cap nuclear and renewable energy revenues on companies whose profits result from gas prices. Moreover, the United Kingdom Prime Minister has been urged to increase the tax on the windfall that had been passed at the beginning of the year. Also, President Biden has threatened oil companies with high levies as they are profiteering from high prices unless they reduce consumer prices.
Conversely, windfall taxes are good in theory and are appealing to the public but history has shown that they fail to achieve the anticipated results. For instance, in the 1980s, the US collected only $80 out of the imposed $393 billion dollars respectively (Bloomberg, 2022). Furthermore, it is hard to determine, what entails a windfall because such a tax might lead to many companies closing down in the future due to fluctuation in profits.
Cultural Lessons from the Article
The culture of over-dependence and escapism is prominently featured in the article. For instance, many European countries rely on Russian oil and this has resulted in their inability to meet individual states’ demands during the war crisis hence leading to punitive measures. Although the leaders avoid their dependence on Russian energy, their efforts are minimal. Further, both the US and EU’s decisions for an arbitrary windfall on companies penalize innocent shareholders while punishing investments. As a result, they escape individual realities concerning their spending and taxes.
Reference
Bloomberg. (2022). Windfall Taxes Are All the Rage. They Shouldn’t Be. Web.