Obama Drops Windfall Tax

President-elect Obama's team anonymously announced that Obama would be dropping his promised windfall tax on Big Oil. Obama had originally pledged a 20% profit windfall tax on oil that went above $80/barrel. Many environmentalists and liberal groups are criticizing this move as a policy retreat. Oil's recent decrease from $147 to $47 has some groups looking for other ways to control the effects of Oil companies on the environment and tax payers. Some say the windfall profit tax is not this issue as much as the tax giveaways that Big Oil receives.

Obama's transition team has reiterated that $80/barrel was the target price for the tax. The tax is not included in Obama's middle class rescue plan. The oil companies need to be prepared for such a tax. If such a policy were enacted it could put a dent in profits past a certain level. This could open new windows of Tax Risk facing these companies. New assessments would need to be performed to identify the new tax environment facing the firms. The Risk would then have to be managed and monitored and would then have to be communicated across all levels of the company from shareholders to suppliers. Such a tax would expose management to new corporate governance processes. The tax should be set in place now as a country wide insurance policy against rising prices. The idea would be perfect right now with prices below $50 as the companies would have more incentive to keep the prices below $80. It would be ideal for the American people as well. If Americans know that prices are hard pressed to go above $80 for Big Oil then they would be more likely to reduce their own consumption toward that level.

http://www.businessweek.com/bwdaily/dnflash/content/dec2008/db2008124_176271_page_2.htm

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