On Tuesday, British Petroleum (BP) reported a record profit of $28B for 2022. The company increased its dividend by 10% in a sign of confidence in the market’s continued strength.
Underlying replacement cost profit — BP's definition of net income — reached $4.8B in the fourth quarter compared with analysts' forecasts of a $5B profit.
Oil giants have gained excess profits due to the war in Ukraine and the rapid rise of energy prices. A more serious and fair windfall tax on energy companies' profits would redress the imbalance between companies' contributions to the state and their earnings and help struggling families pay their rapidly increasing utility bills. Individuals are obligated to contribute to society through taxes and other forms of support, and companies must do so too.
Windfall taxes weren't a good idea in the first place, and increasing them will have serious repercussions. While they may seem like an obvious solution to the UK's growing hole in public finances, in reality, it's a short-term crutch that will lead to a new set of problems down the road. They discourage domestic investment and send the dangerous message to businesses that success must be accompanied by a heavy price.