With crude at about $ 136 a barrel and private Indian oil companies making windfall profits on sale of crude, the imposition of ?windfall profit tax? has once again come into forefront. Samajwadi Party (SP) general secretary Amar Singh has called for a 20% oil windfall tax for private players like Reliance Industries Ltd (RIL).
In a letter to Prime Minister Manmohan Singh, the SP leader calls for setting up a high level expert committee to examine the proposal of a 20% oil windfall profit tax.
Private upstream oil producing companies and private standalone refineries are making windfall profits in production and refining business as they are charging international prices without any linkage with actual production and refining cost. The refiners are also getting import duty and sales tax exemptions from the Centre.
Amar Singh?s letter comes at a time when the relations between Congress and the Left are shaky and the Congress possibly looking at the Samajwadi Party for support. The SP has also come out in support for the government to go ahead with the nuclear deal.
RIL?s net profit has soared, and has become the first private sector company in India to cross Rs 15,000 crore ($3,739 million).
Launching a scathing attack on petroleum minister Murli Deora?s statement to the media that there was nothing wrong in making windfall profits, Amar Singh, in his letter to the Prime Minister said such ?insensitive statement by a minister in your Cabinet betrays the callous outlook of some departments of the government towards the plight of the aam admi.?
Drawing examples from countries like the US and the UK, Singh said imposition of similar taxes in the past by such countries had led to additional revenue of Rs 86,000 crore and Rs 2,83,000 crore, respectively. More recently, the Democrats has pushed for a 25% tax on any ?unreasonable profits? of the five largest US oil companies, Singh said.
