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11 June, 2022

Tax windfall profits to stop gas profiteering

icon gas firms,gas price gouging,windfall profits
Tax windfall profits to stop gas profiteering

Gas firms are gouging customers. The British government is taxing windfall gas profits to provide relief to consumers.

"It's outrageous that oil and gas companies are able to take advantage and make four times the profits that they made when there wasn't a war," Bharat Ramamurti, deputy director of the National Economic Council - CNN

Gas prices and inflation has also surged in the United Kingdom. "Oil and gas companies will be charged a 25 percent tax on their “extraordinary” profits. The tax will be phased out as energy prices return to normal. It will generate £5 billion over the next year, amounting to about a third of the cost of the direct payments for households." - NY Times

The British action offers a lesson to America. Follow the money with this relationship map how a similar measure could help Americans, and the bills being proposed.

Stop gas profiteering with a windfall tax
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How the British are tackling gas profiteering

Oil and gas companies will be charged a 25 percent tax on their “extraordinary” profits. The tax will be phased out as energy prices return to normal, Mr. Sunak said, but will not last beyond 2025. It will generate £5 billion over the next year, amounting to about a third of the cost of the direct payments for households, the Treasury estimated. The measure will include an investment allowance that will help companies cut their tax if they reinvest their profits in Britain.

“The oil and gas sector is making extraordinary profits,” Mr. Sunak told lawmakers in Parliament. “Not as the result of recent changes to risk taking or innovation or efficiency, but as the result of surging global commodity prices. For that reason, I am sympathetic to the argument to tax those profits fairly,” he added. This month, Shell, the London-based energy giant, reported its biggest-ever quarterly profit for the three months that ended in March, making $9.1 billion, and BP reported its largest quarterly profit in a decade." - NY Times

Gas companies gouging consumers

President Joe Biden drew scrutiny on Big Oil. "Everybody says, 'Oh, Biden won't let them drill,'" Biden said on "Jimmy Kimmel Live" Wednesday night. "They have 9,000 drilling sites that they already own that are there. They're not doing it. You know why? Because they make more money not drilling and buying back their own stock."

Energy Secretary Jennifer Granholm told CNN last month that Big Oil is "prioritizing profit for their shareholders over helping their citizens". This situation has sparked calls from Democrats for a windfall profit tax on Big Oil as a way to help people who can't afford to drive or heat their homes. Such a tax was imposed last month by the United Kingdom on the "extraordinary" profits of British oil and gas companies." - CNN

Proposed legislation to cut gas profiteering

Big Oil Windfall Profits Tax Act - Introduced in Senate (03/10/2022) This bill imposes an excise tax on the windfall profits of crude oil on taxpayers who extracted and imported more than 300,000 barrels (a barrel equals 42 U.S. gallons) of taxable crude oil (i.e., crude oil, crude oil condensates, and natural gasoline) in 2019, or who extracted and imported that amount in the current calendar quarter. The bill requires rebates of the tax collected to be paid to individual taxpayers. The bill establishes the Protect Consumers from Gas Hikes Fund to finance such rebates. - Congress

Follow the money to see how gas firms are profiteering

Anti-price-gouging legislation

The Federal Gas Tax Suspension and Windfall Profits Tax Act, to address both of these issues at once. The bill would suspend the federal gas tax through the end of 2023, which would provide some immediate relief at the pump. To prevent the oil companies from jacking up their prices further, the bill would also impose a new 50 percent tax on income that is in excess of their reasonably inflated average profit. This windfall profits tax would be used to fund highway and mass transit projects while the gas tax is suspended.

This is not a complete solution, but it's a start. Oil companies could still choose to increase profits even with the disincentive of losing half of that income. That's why the anti-price-gouging legislation the House passed last month, which would empower the Federal Trade Commission to crack down on such abusive practices and punish bad actors, is so important. To get us through the dire impacts of inflation, we need price relief at the pump right away. The combination of a holiday from the gas tax and a windfall profits tax on the oil companies could help." - Adam Schiff in News Tribune

TakeAway: Tax gas firms' windfall profits to stop profiteering and fund relief to households.

Deepak
DemLabs

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