Thread: Mining Super Tax

I don't think anyone would argue that the miners should pay a fair level of tax or even a premium for benefiting from our finite resources. Don't think a super tax on banks would result in any benefit to the community as a quick increase in margin would result.

What has been lacking so far from the government is information. In fact when I went to the ALP site to find some it took me several attempts to locate this link. Strange given how important this issue is you would have thought it would be a headline banner.

Anyway what I would like to know is how this level of taxation compares to other similar countries and will we still be competitive.
Why is it necessary to offset state royalties which are still subject to the whim of those governments.
Why is the government bond rate deemed an appropriate return for the shareholders and that's just for starters.

Perhaps if both the opposition and government spent some time discussing the detail, facts and expected outcomes without all the monotonous rhetoric and spin we could all make an informed decision on the merits of this issue.

Originally Posted by HappyHammer

It's only the mining companies that make super profits over a certain level that will incur the tax increase.

Why should any business who is deemed to make x amount of profit pay more tax for being successful?

Originally Posted by Sebastiaan56

Well Rudd would have lost an election last weekend and Im sure it will never get through the Senate so I wonder what they have been up to while we were chewing the fat on this one....

I think it is because the rest of the world is watching and wondering where to invest. Remember the Howard era when he was going the wharves - because the rest of the world wanted a stable economy to invest in - no industrial stoppages and a stable tax system. Then this out of the blue.

While I have my turn on the box I also think this is not tax reform as Rudd and co are trying to sell it as, and of the whole Henry document, they picked only this one?

Originally Posted by Waldo

Why should any business who is deemed to make x amount of profit pay more tax for being successful?

And indeed why should any person who is successful pay a higher amount of tax on the super earning he/she makes? (Not a digression , just an analogy)

And indeed why should any person who is successful pay a higher amount of tax on the super earning he/she makes?

Agreed, seems like some notion out a Fabian desire to level the playing field. With the view perhaps that too much success is bad and needs to be dealt with.

I note poor men don't hire many people and the same goes for poor companies. If we want to tax profits why not do so in line with what other countries are taxing. I gather this one will be the highest at 40%.

Originally Posted by hughie

Agreed, seems like some notion out a Fabian desire to level the playing field. With the view perhaps that too much success is bad and needs to be dealt with.

So do you also support the abolition of the tiered personal tax system?

To my mind there is not a lot of difference between the mining tax and tiered personal tax, except that maybe the mining tax is too narrowly based.

If you just missed it on Lateline, Andrew Forest gave a very logical, clear and rational explanation why Dudd's Super Tax is bad for Australia.

It's too early for the transcript to be available yet, but if you missed it look it up tomorrow and have a read.

I thought this small section very interesting:

TONY JONES: The Treasurer told Four Corners on Monday that some very profitable companies could end up paying as much as 58 per cent tax overall. Have you calculated what your overall tax would be under the super profit tax?

ANDREW FORREST: Tony, I haven't but I can assure all of Australia this: under this new tax regime Fortescue will pay much less tax.

TONY JONES: What, under the new tax regime you'd pay less tax?

ANDREW FORREST: Under the new tax regime, Tony, we will pay much less tax and the reason for that is that ... I started this company only seven short years ago. We've incurred major losses, as we've gone out and explored and we've developed things which worked and we've developed things which failed. But we are still standing and this year is a truly great year for Fortescue. We will pay tax expenses of some $500 million.

Next year, I'm very proud to tell you, it's in our budget to pay tax expenses of some $1.3 billion. The year after that I would hope it would grow again.

But, if this tax comes in, we will hit a ceiling and then after that, as being a one-project company with an inability now to develop our other projects, our tax will start to dwindle down as we follow our mine life down and we'll pay a lot less tax.

The pie which could've been there would have been cut off. The discoveries which should have been for the benefit of all of Australia would have been cut off.

This is an issue many don't realise, as a mine winds down as the output reduces the tax returned will become smaller.

It was in some ways a good quiet interview.

I think he also said that if this new tax was around when he wanted to start his mining business it would never had got off the ground. So here we are seven/eight years down the track and they are paying half a billion plus in tax. Rudd seems to have problems with 'if it aint broke don't fix it'

I am against this tax, for various reasons... I am not impressed with the huge profits the mining companies either.. Here are the reasons why I am against it..

It is unfair... There are many sectors in Australia that have made huge profits over the years and not been heavily taxed... The property and housing sector has probably made more money for more people in the past ten years then mining yet there is no mention of a super tax for them, same with Telstra who was reported to be making 50% profit on it's fixed line telephone system... The banks are making record profits yet again no tax... Why is mining special it needs a special tax?

It is a de-facto method to remove power from the states into the hands of the federal government... As the state government's own the minerals in the ground they sell these minerals to the mining companies and call it "royalties"...They can raise these charges as they see fit..

If the super tax is bought in it will restrict the amount the state governments can raise royalties and thus restrict their income, meaning they will become more dependant on the federal government for funding...As we have seen, the federal government uses it's monetary power to blackmail the states into doing what it wants... Centralised power like this does not work..

I have nothing against the states raising royalty payments and in fact they should be, and if the federal government wants to introduce a super profits tax then it must do so across the board that will apply to every business and individual in Australia..

Rudd has singled out the mining industry for two reasons.. One in that they are considered a soft target, and two that he expected the Australian way of cutting down tall poppies, the people would embrace it...

The sooner we vote this clown out the better......Then vote abbott out the following election, and by that stage if gillard has not changed the way government operates, we vote her out as well... That is the only way we will get change in Australia...

did someone mention Eureka Stokade?

ANDREW FORREST:

This is an issue many don't realise, as a mine winds down as the output reduces the tax returned will become smaller. ....

And as the profits come down below the super tax threshold he'll be in a position to re-invest as he would be now presumably. Scaremongery.

Also why would this tax deter him from starting his business when the super tax would not apply until he is making huge profits, just a slightly longer ROI if at all.

HH.

Originally Posted by .RC.

I am against this tax, for various reasons... It is a de-facto method to remove power from the states into the hands of the federal government...

The sooner this happens the better think of all the money the taxpayer would save on politicians super and travel if we had only a federal government and abolished the state governments.

If we did this maybe we wouldn't need a Mining Super Tax.

HH.

Originally Posted by HappyHammer

Also why would this tax deter him from starting his business...

HH.

As he said elsewhere in his interview, which went a long the lines of finding investors. The tax kicks in before he has paid off the banks and other investors.

ANDREW FORREST: I'm prepared to negotiate everywhere, Tony. I must share with you that if a massive tax burden cuts in before you paid interest and before you paid capital and your bankers relied on that income in order to lend you the money they have, then they've delivered you a very dangerous impost onto your financial model.

Now, that is my biggest problem with this tax; the fact that it comes in before I can get rid of my bankers, before I can pay all my other taxes. It is a project finance destroying tax.

Makes for a very simple argument against the tax.