Windfall Tax – why Discriminate and Petronas not in?

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Jun 07 2008
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Windfall Tax is not something new but neither was it started from the Jurassic Age. It so happened that certain industry suddenly experienced extraordinary profits and the mouth-watering government came with an ingenious idea to levy such companies under the name of windfall tax. The classic example was Exxon Mobil which reported unusual profits of US$36 billion in 2005 due to high oil prices although historically it went as back as 1970s. Such windfall tax would benefits a nation (and the people) if the government is transparent and knows how to channel the money back to area where it needed the most. However certain quarters would argue that such tactic would reduce the companies’ drives and initiatives to seek more profits – a typical scenario of a communist country whereby nothing belongs to you, so why work hard?

With the current oil prices above $130, both Hillary Clinton and Barack Obama have both pushed the idea of “Windfall Profit Tax” on oil companies. Heck, almost all U.S. Presidents somehow fancy such idea. First it was Richard Nixon in 1973, then Jimmy Carter in 1977 and now Obama, Clinton and McCain. In Malaysia, PM Abdullah Badawi had announced windfall tax on plantation stocks and IPP although today the steel millers plan to ask the government not to impose a windfall tax on them despite their good profits (Good Luck!).

IPP Windfall tax back to TNBWait a minute, what about the oil companies especially Petronas? Most of the cases in United States involved oil companies for obvious reason but with the oil prices touching $140 it’s strange Petronas is yet to be slapped with the so-called windfall tax. Maybe the opposition PKR-DAP-PAS should push this idea in the Parliament. It doesn’t make sense to let Petronas off the hook – the company should contribute back to the society. And since Petronas does not report to anyone (including Parliament) except to only one person and that’s the Prime Minister himself, let’s bombard and demand the PM to impose Windfall tax on Petronas. If U.S. had mooted such a noble idea before, perhaps the same should be done here in Malaysia.

That’s right – light, sweet crude for July delivery officially finished the day at $138.54, up $10.75 on the Nymex Friday but after the settlement, the contract jumped as high as $139.12 and the Dow plunged 400 points (let’s see if KLCI could take that on Monday). Israeli Cabinet minister said his country will attack Iran if it doesn’t abandon its nuclear program and instantly the oil prices made their biggest single-day leap – a whopping $11 for the day. If the black gold remains at current status, get ready for at least RM4.00 a liter come this August. Gosh! It happens so fast that I bet nobody has the time to prepare for the so-called demonstration involving 100,000 protesters. I meant what should you write on the boycott cards – “People suffers with RM2.70” or “People suffers with RM4.00”?

Meanwhile, it was reported that miraculously some IPPs (independent power producers) may be able to pass on the cost of a windfall tax to Tenaga Nasional Berhad (KLSE: TENAGA, stock-code 5347) if their agreement with TNB has such clause. Now, whose stupid idea was it to include such bias clause in favor of IPP in the first place? And to think of the possibility that TNB will pass on the cost back to the consumers (again) is simply horrifying. And what about those banks and telecommunication companies – shouldn’t they be subject to Windfall Tax as well? Yeah, impose such tax on all of them and the money derived from it should be able to help towards the so-called fuel subsidy until a better method that would not burden the poor people is ready. Hey, we gotta be fair, right?

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You are so creative with all these ideas. Windfall tax might not be welcome by the rich, but it is very much helpful to the poor (only if the tax money is channeled properly as you proposed).

thanx kclau … i suppose if you want to play rough, then get all the players to be naked …

cheers …

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