RuhaniAIR 5 · CSE 2023 · 170 wordsTheir whole copy
Opening · a definition
Windfall tax refers to tax on windfall profits i.e. unexpected profits generated due to capital gains arising due to external factors like war, pandemic, additional infrastructure.
Eg:- i) Property prices of an area goes up if metro passes through that area.
Body · points and prose
ii) Oil companies made windfall profits due to Russia-Ukraine war.
Windfall taxes can lead to effective redistribution of wealth and promote greater economic equality.
ARGUMENTS IN FAVOUR:-
• Windfall tax is levied because the Company or individual made windfall profits, not because he did any action or effort to make profits, but because he benefitted from govt. investment (like metro) or because he benefitted due to war. → Thus, windfall taxes can increase government revenue and enhance its capacity of redistribution of wealth.
ARGUMENTS AGAINST :- → Increase in govt. revenue may not lead to increase in social spending. → Excessive taxation can make a country unfavourable for doing business.
Close · a way forward
Thus, the government must levy windfall taxes but then ensure that it is redistributed for greater equality in society.