Labor's Super Tax on Miners
Government big wigs in China had a meeting yesterday about Rudd's profits tax. Some Chinese companies have already shelved investment plans in Australia. Last year China's investment in our resources industry reached a record $26 billion. If they do decide to cut back, we're in deep do do.
I am horrified that we are attacking the tall poppies in our mining industry. I really don't care how much money they make and how much actually stays in the country. They employ hundreds of miners and ancillary tradespeople (my son-in-law being one of them). These workers earn huge money for a good reason. They usually work in isolated places, go home for one week in four, pay huge taxes and spend their money in Australia. Logically, even if the mining companies stay in Australia will they still be paying these huge salaries to their employees? Will they still be able to export these minerals and be competitive in the global market place? The ramifications of this tax are enormous and no matter which way you look at it we are going to be the losers.
As a previous poster said, we do not own the minerals, we let someone else do the hard work and take the risks, if which there are many. Why should we think that they should pay us for this privilege?
Balance of trade is what it is all about, and if we lose the bargaining power of our minerals, we are on the slippery slide to economic disaster.
I agree with everything you said Pommy. There is only one negative thought that comes to mind, could Australia end up a quarry full of holes?
It has been suggested that the Euro has dived because of Greece.
True initially. But that is now history. The reason that the Euro is still
in descent is because of Spain, Portugal & Italy. When the next of these
nears default, either Germany or France, or both, could leave the Union,
which will be the obit. Be very wary. Our Germany & France is Western
Australia.
The American Dollar has not risen. The Euro has collapsed. For the very
reasoning behind this, the Aussie Dollar would normally have gone
through the roof. There is only one reason that a currency goes down.
It is because the international money is exiting. Ergo:- Mining Super Tax.
The most stable currency on Earth is the Swiss Franc. If you want to see
the Franc take a dive, just start a rumour that the Swiss Gov., is about to
Nationalise the Watch Industry. This gross stupidity is not a rumour.
The mining super tax is a de facto Nationalisation of the mining industry
In one of the biggest five-day slides in history, the Aussie dollar fell almost 8 per cent to US83c and is now a staggering 12 per cent off its April highs, causing headaches for importers and travellers heading overseas. For us little people, the drop will push up the prices of imported electrical goods and cars. Hope you don't need any new white goods soon.
An interesting angle on the miners' tax.
Lotteries have been described as a stupidity tax levied on an innumerate population. Mr Rudd’s proposed Resources Super Profits Tax (RSPT) is also a stupidity tax. It will punitively tax mining corporations foolish enough to operate in Australia under a rapacious, ignorant and unpredictable regime.
Miners represent around 30% of the companies on the ASX and 20% by market cap. Mining accounts for 5.6% of our GDP and 35% of our exports. Mining is an industrial sector in which Australia truly excels but Mr Rudd’s new tax will turn mining profitability itself into a lottery.
Previously I have been sufficiently non-partisan to at least acknowledge intelligence on the Labor side. I am now happy to set down that heavy load and move on. This new super tax on mining is the singularly most insane and quite frankly stupid political proposal I have heard in my life. Even the mine workers don’t want it. You would think that would get Mr Rudd’s attention. Lamentably it does not.
Lindsay Tanner attempted to defend it on Q&A;arguing that the resources in the ground belong to the Australian people and can only be sold once.
I have a news flash for Lindsay Tanner and the other geniuses in the ALP. The metals and minerals in the ground are owned by the mining companies. They buy the leases on the tenements for exploration, purchase the properties and then pay State Governments a royalty to recompense the Australian people appropriately. Remember that the Australian people do nothing for this royalty reward, and are already rewarded with job creation, foreign investment and export capital flowing into our economy, and the huge amount of corporate tax the companies already pay. The companies have done the exploration, the building and running of the mines and the marketing and selling of the product. All of these are very high risk business activities. Exploration is a massive risk for investment capital. Mines are extremely difficult beasts to run and the commodity markets are very tough indeed.
This new 40% tax on profit above the risk-free rate (currently 5.7%) is outrageous. This tax also applies before debt financing is accounted for, making this more a tax on revenue than profit. More than outrageous, this is scandalous. The second half of the proposal entails the taxpayer guaranteeing 40% of any losses made by mining companies. As a taxpayer I object to that and the companies don’t want it either. They are happy to take their own risks, pay corporate tax the same as every other business and keep their hard-earned profit for their shareholders and our super funds.
Lindsay Tanner may think the resources in the Australian dirt can only be sold once, but the mining companies now have to buy them twice.
Mining companies became progressively less profitable between 1980 and 1999 during a long commodity bear market. Commodities have been in a bull cycle for the past ten years and many believe this could last another 10 to 15 years. Now that the planets are aligned for mining companies to make money, the Labor Government is seeking to massively and selectively tax them.
Who will be next? Which industrial sector will be the next to start doing well, and by doing so move into the Labor gun-sights for special taxation?
This Government should be doing all it can to encourage foreign investment in Australia. This new tax will repel investment capital.
This Government should be doing all it can to minimise the corporate tax burden. This new tax maximises the tax burden.
This Government has revealed itself many times as ardently hard left but wrapped in a protective cloak of faux economic conservatism. This new tax rips that cloak away, exposing the pugnacious ignorance and economic vandalism beneath.
Gough Whitlam’s meddling with foreign mining investment in Australia caused an exodus of corporations and capital in the 1970s. Here we have another homage to Mr Whitlam from Mr Rudd.
Heaven help us. [url=http://www.quadrant.org.au/blogs/qed/2010/05/rudd-s-stupidity-tax]source[/url]
Everybody is talking about the justice or injustice of the mining tax.
None of that history is at all important anymore. In less than 3
weeks this act of total mania has cost Australia over $115 Billion
in GDP alone for the coming year. Yes, that is one hundred & fifteen
thousand million dollars !!! In case somebody missed that, it
equates to $5,000 for every man, woman & child in Australia for
the coming year alone. Before somebody says that is scaremongering
& alarmist, let me say that it IS very scary & very alarming.
This is the AWU's notice to mine workers not to panic. I would imagine a few men on good wages will be very worried, you know the ones who fly in and fly out - big dosh.
http://www.awu.net.au/super_tax_danger_flyer_print_1.pdf
And yet another expert , Robert Gottliebsen, on the effects of the proposed Mining tax:
[b]Australian currency and share dealers are being hit by a wall of selling from European and Japanese investors as it becomes clear that the government's horrendous mining tax mistake is affecting the sovereign risk of Australia.[/b]
Australia's currency and shares would have been expected to decline in line with the drop in commodity prices, but we are seeing panic selling of considerable proportions.
[url=http://www.smartcompany.com.au/economy/20100520-why-australian-shares-and-the-aussie-dollar-are-being-slammed-gottliebsen.html]Source[/url]
The government clearly not only did not understand the effect of the tax on the mining industry but had no concept that when you take such an action at a time when the globe is extremely nervous, there is grave danger that it will trigger a bear raid on Australia shares and currency and endanger our bank borrowing. And that's what has happened.
The cabinet needs urgently to drastically change the RSPT. Changing it will not repair the damage because confidence has been lost, but it will stop an all-out collapse. Superannuation savings in Australia have already been hit. Another big blow would be devastating.
Same source as above.
A lot of people thought that the mining sector saved Australia from going down the gurgler during the gfc, me too. Try to imagine Australia without mining for a minute. they employ 174,000 workers of the country's 11 million workers and another 200,000 indirectly. Labor thinks the big miners will stay and cop the tax, I'm not so sure.
Julia Gillard says that BHP Billiton and Rio Tinto pay just 13 per cent tax and that big miners can afford more. I tend to agree with her, that's chicken feed. What's going on here, have we jumped the gun on this tax afterall?
I don't know whether this is true or not, but the Annual Return of BHP
does not tend to read 13% tax. their resourses tax to the WA Gov is
half this on it's own. This sounds like another spin.
What a joke, that 13% tax that Julia quoted yesterday was from a student's paper from the University of North Carolina.
Now I'm totally confused. Twenty leading academics and economists have backed the proposed tax, saying the sector should fork out more of its profits.????
The group, including the former chairman of the Australian Competition and Consumer Commission Allan Fels, issued a statement today supporting the proposal to claw back 40 per cent of mining's super profits. They say the ongoing debate over the tax has been dominated by misinformation.
What's going on here?
The mining tax is not responsible for a decline in the value of the Australian dollar.
Less than an hour ago on radio, I heard Terry McCrann say Rudd's announcement of a mining tax has poured fuel on the fire and worsened the situation here unnecessarily.
Frankly, I give more weight to [u] his[/u] opinion.