Windfall Tax

Windfall Tax
A tax levied by governments against certain industries when economic conditions allow those industries to experience above-average profits. Windfall taxes are primarily levied on the companies in the targeted industry that have benefited the most from the economic windfall, most often commodity-based businesses.

As with all tax initiatives instituted by governments, there is always a divide between those who are for and those who are against the tax. The benefits of a windfall tax include proceeds being directly used by governments to bolster funding for social programs. However, those against windfall taxes claim that they reduce companies' initiatives to seek out profits. They also believe that profits should be reinvested to promote innovation that will in turn benefit society as a whole.

Windfall taxes will always be a contentious issue debated between the shareholders of profitable companies and the rest of society. This issue came to a head in 2005, when oil and gas companies, such as Exxon Mobil who reported profits of US$36 billion for the year, experienced unusually large profits due to rising energy prices.

Investment dictionary. . 2012.

Look at other dictionaries:

  • windfall tax — noun A tax levied on windfall profits, profits arising, esp suddenly and unexpectedly, as a result of events not directly connected with the company, etc concerned, such as changes in currency exchange rates • • • Main Entry: ↑wind * * * windfall …   Useful english dictionary

  • windfall tax — ➔ tax1 * * * windfall tax UK US noun [C] TAX ► an extra tax that a government charges a company when it makes a large unexpected profit, especially if they have been helped by economic conditions: »Following record profits, a €5bn windfall tax… …   Financial and business terms

  • windfall tax — windfall .tax n an additional amount of tax that the British government sometimes takes from a company that has suddenly earned a large amount of money that it did not expect to earn …   Dictionary of contemporary English

  • Windfall tax — In the United Kingdom, the Windfall Tax was a tax levied on privatised utility companies.In Australia, windfall tax may refer to either: * Commonwealth places windfall tax, imposed under the Commonwealth Places Windfall Tax (Collection) Act 1998… …   Wikipedia

  • windfall tax — UK / US noun [countable] Word forms windfall tax : singular windfall tax plural windfall taxes an extra amount of tax that the government charges a company that makes a lot of money unexpectedly …   English dictionary

  • windfall tax — An exceptional *taxation charge on *corporations that are deemed by a government to have made *windfall (or excessive) profits owing to unusual circumstances. *Private sector *monopoly suppliers of *public utilities, for example, are subjected to …   Auditor's dictionary

  • Windfall tax — Die Zufallsgewinnsteuer (engl. windfall profits tax) ist eine 1980 in den USA entstandene Steuer, die auf Grund von plötzlichen Mehrgewinnen von Ölfirmen in Zusammenhang mit dem damaligen arabischen Ölembargo entstanden ist. Die Steuer wurde im… …   Deutsch Wikipedia

  • windfall tax — (also windfall profits tax) noun a tax levied on an unexpectedly large profit, especially one regarded to be excessive or unfairly obtained …   English new terms dictionary

  • Windfall Tax (United Kingdom) — The Windfall Tax was a tax on what were claimed to be the excess profits of the privatised utilities [] introduced by the Labour government in 1997. It followed from their manifesto… …   Wikipedia

  • Windfall profits tax — A windfall profits tax is a higher tax rate on profits that ensue from a sudden windfall gain to a particular company or industry. United StatesIn 1980, the United States enacted the Crude Oil Windfall Profit Tax Act (P.L. 96 223) as part of a… …   Wikipedia

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