Q.3 What is windfall tax and why is it needed? Highlight the challenges involved in imposing such a tax? (15 Marks)

Comments

4 responses to “Q.3 What is windfall tax and why is it needed? Highlight the challenges involved in imposing such a tax? (15 Marks)”

1. 

   October 7, 2022

   Shubham Chate

   KPfn46R1gsfT12 -My Razorpay ID

   Log in to Reply
   1. 

      October 10, 2022

      Staff @CD

      Shubham

      Decent attempt.
      Your concept is fine. Presentation is also decent.
      Introduction is decent. You can mention that no additional effort or expense is done by companies on obtaining such profits on which these taxes apply. Good use of example.
      Need of windfall tax is also well written. Further, you can mention pandemic recovery and supply issues; widening income inequality; grotesque greed of companies which need to be controlled.
      In challenges, you could additionally mention the difficulty in calculating such profits, populist and politically opportune nature of such taxes, Issue of determining who should be taxed (small companies, startups or only big companies) etc. Loss in investor confidence, subjectivity and absence of proper guidelines are also fine issues that you have highlighted.
      Conclusion is fine.
      Keep practicing. 🙂
2. 

   October 8, 2022

   Alankrit Srivastava

   Payment ID : #0000645504
   Staff @CD

   Log in to Reply
   1. 

      October 11, 2022

      Staff @CD

      Alankrit

      Decent attempt. Presentation is good, content is also fine.
      In introduction, you have explained it decently, example of the energy price-rise as a result of the Russia-Ukraine conflict which has led to supernormal profits for energy companies can be mentioned.
      Need of the tax has also been well written, since no extra effort is required for windfall profits, you can frame the point regarding environmental exploitation better. Other points are good, dimension of COVID 19 and the need to put the economy on a recovery path can also be added.
      In challenges, you could additionally mention the difficulty in calculating such profits, populist and politically opportune nature of such taxes, Issue of determining who should be taxed (small companies, startups or only big companies) etc. Loss in investor confidence, tax evasion etc are good points. Export competitiveness decrease is a result of multiple factors, so putting the blame solely on windfall tax can be avoided. There is a difference in increase in regular corporate tax and windfall tax which should be kept in mind.
      Conclusion is fine.
      Keep practicing. 🙂