Addressing a press conference here, Lok Satta president N Jayaprakash Narayan appealed to political parties, Parliament and the Government to consider this proposal, instead of indulging in allegations and counter-allegations over Comptroller and Auditor General's report on allocation of coal blocks.
A windfall profits tax is a higher tax rate on profits that ensue from a sudden windfall gain to a particular company or industry.
Narayan said allocation of coal blocks to private parties for captive mining could not be faulted, as the public sector Coal India has failed to meet the demand for coal and forced the country to spend precious foreign exchange on import of the fuel. The shortfall was as much as 100 million tonnes a year, he said.
According to CAG, the difference between cost of production and market price in 2010-11 worked out to Rs 295 per tonne. As the difference fetched undue returns to private parties, the Government could legitimately levy a tax on such windfall profits. Britain had imposed such a tax when it allocated natural gas blocks in the North Sea, he said.
The tax could be levied wherever beneficiaries of public natural resources make huge profits. He also said that allocation of coal blocks to private parties could not be cancelled like the licenses for 2-G spectrum.
"The coal blocks already allotted cannot be cancelled as the beneficiaries have invested hundreds of crores of rupees in their development for captive use in power generation. Cancellation at this stage will cripple the economy as it will aggravate the ongoing power crisis. All the allottees have legitimate coal requirements and the mines are being developed for captive purpose," he said.
