Yes, everyone\’s favourite retired accountant speaks out!
Let’s be clear: no one is saying windfall taxes should be imposed on all profitable businesses. No one ever has. What is being said is that those companies that are earning super-normal profits through circumstances entirely not of their own making and that do not in any way represent a return on entrepreneurial effort should be taxed on that unearned advantage otherwise afforded to a select few at cost to society as a whole.
There is no reason why this will ever deter investment: what is being taxed is not a return to investment.
1) Who gets to decide what are "super-normal" profits? Looking at the BP accounts they seem to be making 25-30% returns on shareholder\’s equity this year (at least, the 6 months they\’ve reported for then annualised). Is that super-normal? Should we super-tax every company that does this well or better? Anyone want to compile a list?
2) Who gets to decide what is entrepreneurial return and what is not? Is investing in Russia 5 years ago entrepreneurial? No? Prospecting for oil entrepreneurial? No?
3) Have people never heard of the idea that making excess profits (ie, above the general risk adjusted rate of return) is what attracts new capital to the sector which, in turn, drives down those excess profits? That profits are he very signal which shows how capital should be allocated? No?