Recent calls from predictable sources to emulate Britain and introduce a one-off “windfall tax” on petrol companies, are massively ill-considered.
An important principle of any tax system is consistency. Ad hoc “one-off” taxes are contrary to that principle.
Participation in market economies, be it owning a coffee-shop or an oil company, necessitate acceptance of unexpected events causing a windfall or a bankruptcy-facing collapse in demand.
Windfall situations see a rush of new entrants, inevitably causing a glut and price-collapse, thus being self-correcting. So too a collapse in demand sees the withdrawal of participants until a new supply and demand balance is achieved.
Periodically there are attacks on drug research companies demonstrating similar ignorance when they’re condemned for allegedly price-gouging.
The reality is that the vast amount of medical research being undertaken to find drugs for ailments, frequently fatal, proves in vain. But they persevere without any guarantee of a return in the hope of a huge pay-off should they succeed. Remove that incentive and they won’t bother.
Most people over say 50 will have received drugs for ailments which untreated would have killed them. Once found they’re taken for granted as some sort of human right. It’s time elementary economics was a compulsory school subject.
8 Comments
Surely, the flip side is a tax credit for when things don’t go so well?
Bob is half right , if he had also been humorous he would have been 100% right. He must try harder !
Quite so. I wouldn’t be writing this today if it weren’t for Tobramycin and Ceftazidime which cleared up a Pseudomonas Aeruginosa infection in my lungs which tried to kill me over two and a half years. Amazing stuff and I owe my life to all those science experts who work away developing new drugs. They’re priceless, especially when you’ve looked into the void, and I’d willingly pay extra tax to the people who keep me, and my car, running.
The politics of envy is the basis for this. Typical labour party hatred towards the well off, until they get a few bucks, courtesy of the taxpayer.
Not even the gods can give everything to everyone and save people from themselves. Yet, human arrogance believes a measly “windfall tax” will fix what gods cannot fix… yeah right… ignorance is bliss… or a curse?
A more appropriate tax or tariff might be of weapons maunfacturers profits, who caused the issue in the first place…
A basic economics course should be compulsory for all those entering Parliament.
Although one routinely see’s large corporations seek a taxpayer funded bailout. If wind fall taxes are out then bail outs should be off the table too.
… Drug companies only have a limited number of years in which they own the patent to a medicine. After this other companies can make generics, so new drugs tend to be expensive then almost overnight become cheap as chips. However Drug companies are notorious for fiddling results. For some further interesting reading about said companies try “Bad Pharma” by Ben Goldacre