Mining Super Tax

This makes interesting reading:

Nothing fair about this tax | The Australian

Also something not quite expressed is this little line:
"In effect the government intends to levy two taxes, though it gives them the same name.

There is to be a 40 per cent resource rent tax, but there is also to be a 40 per cent capital levy, equivalent to an expropriation of 40 per cent of the capital already in the mining industry."

How ever one wishes to look at this tax I feel that there is much in it that has NOT been fully explained to the public by the government and to a lesser extent by the industry.

Yes very interesting....

The author writes...

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Finally the states, which are the legal owners of most Australian mining resources, will be tempted to discourage or defer mining investment. They have yet to fully show their hand, but if the states continue to charge royalties on new projects, which is the likeliest outcome, the miners will pay double tax.

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But in fact...from gov website..

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The <ABBR title="Resource Super Profits Tax">RSPT</ABBR> will be deductible for company income tax purposes. That is, every dollar of <ABBR title="Resource Super Profits Tax">RSPT</ABBR> a firm pays reduces its income for the purposes of company income tax by a full dollar.

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Which suggests that the reader that left the comment below is more informed than the author of the article.....

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Johnny Posted at 9:36 AM Today

The mining industry represents 7% of GDP and 1.6% of the Australian workforce. The other 93% of GDP and 98.4% of the worforce will benefit directly from the RSPT through lower statutory company tax rate, better retirement security and improved infrastructure. A correction: the miners will not pay double RSPT/Royalties, as an offset provision is proposed.

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HH.

Currently mining companies pay 30% tax on taxable income the same as every other company in Australia. Miners do pay royalties which vary, and these reduce the taxable income. Combine the two and they seem to pay around 40% or so all up from what you read.

The deductions they get are the same as all other Australian companies have access to, there are no special exemptions. There are allowances that differ on capital expenditures and other rebates but that is often more timing than anything else.

There is not enough written on how the new tax will be assessed, the claims that no operation will become unprofitable are not supported by enough information to be compared with the current system. There is no mention of timing of claims or what will change.

However the Government seems confused about what constitutes tax take refusing to combine both royalty (a state tax) and income tax in its pronouncements. It also states profits on the basis of some adjusted number at odds with either accounting or tax profits. It is infact indulging in misinformation and using a heavy hand whilst refusing to engage those most effected in any meaningful way.

I don't think its possible to compare what is on offer due to the minimal information, and the lack of any sensible basis for many of the numbers being put forward. It would seem that this is an announcement in haste lacking in substance, and we will have to wait and see if Mr Rudd and Mr Swan can actually come forward with a more decent approach that industry analysts and commentators can actually use to work out what is really being proposed.

I think the analysts should read the information that is available on the governments website here. Maybe then they can criticise what the government is actually doing rather than what they believe they are doing. As evidenced by the article posted before the "experts" are basing their assessments on bits of the information.

Here is a comparison from the governments website.

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Effective tax rates on a hypothetical resource project
<TABLE class=dataTable cellSpacing=0 summary="This table outlines effective tax rates on a hypothetical resource project." cellPadding=0><THEAD><TR><TD class=textLabel>Rates of return</TD><TD>Effective tax rate under royalties plus 30% company tax</TD><TD>Effective tax rate under <ABBR title="Resource Super Profits Tax"><ABBR title="Resource Super Profits Tax">RSPT</ABBR></ABBR> plus 28% company tax</TD></TR></THEAD><TBODY><TR><TD class=textLabel>6%</TD><TD>45.4%</TD><TD>28.0%</TD></TR><TR><TD class=textLabel>10%</TD><TD>40.9%</TD><TD>39.5%</TD></TR><TR><TD class=textLabel>15%</TD><TD>38.7%</TD><TD>45.3%</TD></TR><TR><TD class=textLabel>20%</TD><TD>37.6%</TD><TD>48.2%</TD></TR><TR><TD class=textLabel>25%</TD><TD>36.9%</TD><TD>49.9%</TD></TR><TR><TD class=textLabel>50%</TD><TD>35.5%</TD><TD>53.3%</TD></TR></TBODY></TABLE>
NOTE: Effective tax rates are for a hypothetical project that has average operating costs based on ABS data. Assumes a risk-free rate of 6 per cent and royalty rate is 6 per cent. These estimates ignore the risk-sharing aspect of the <ABBR title="Resource Super Profits Tax"><ABBR title="Resource Super Profits Tax">RSPT</ABBR></ABBR>. Therefore these estimates should be taken as an estimate of the tax rate applying to a project that generates, say, a 25 per cent return with no risk. Effective tax rates under the <ABBR title="Resource Super Profits Tax"><ABBR title="Resource Super Profits Tax">RSPT</ABBR></ABBR> are lower if the project involves risk, because the risk is shared with government under the <ABBR title="Resource Super Profits Tax"><ABBR title="Resource Super Profits Tax">RSPT</ABBR></ABBR>.

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HH.

Under this regime what stops the states lifting royalties to say 15% thus negating any income to the feds or more importantly reducing the current effective tax take?

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Originally Posted by m2c1Iw

Under this regime what stops the states lifting royalties to say 15% thus negating any income to the feds or more importantly reducing the current effective tax take?

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Not sure except they would reduce thier income because they would be saying anything under 15% is royalty free.

HH.

Let's see the government squirm out of this, makes interesting reading, inclusive of all the links. It will be a good one on Lateline tonight.

I'm not arguing on points of view with members. It is a very bad thing that on the world stage Dudd has put a big black mark on our economy.

ABC The Drum Unleashed - Ruddtopia: fool's gold

On Lateline last night, which Anthony Anthony Albanese when questioned would not reply to Tax threatens shareholder dividends: Wesfarmers - ABC News (Australian Broadcasting Corporation)

Just be aware he's with the institute of public affairs, a pro coalition "think tank". Kohler's article is interesting (linked to off that one).

I hate arguing the man rather than the point but you have to consider the political leanings especially when a piece is so heavy on opinion and light on facts.

As I said before the intricacies of the tax are irrelevant. If the tax goes up profits go down. That's money taken from either reinvestment in australia or shareholders most of whom are australians. 9 bill, straight out of your pocket and into Rudd's next pork barrel.

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Originally Posted by m2c1Iw

Under this regime what stops the states lifting royalties to say 15% thus negating any income to the feds or more importantly reducing the current effective tax take?

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The states are free to continue to raise royalties in the original announcement, but as that was missing virtually all but the most basic detail it doesn't count for much.

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Originally Posted by Waldo

Let's see the government squirm out of this, makes interesting reading, inclusive of all the links. It will be a good one on Lateline tonight.

I'm not arguing on points of view with members. It is a very bad thing that on the world stage Dudd has put a big black mark on our economy.

ABC The Drum Unleashed - Ruddtopia: fool's gold

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There seems to be starting from those of right wing persuasions, the habit of insult.
Kevin Rudd is PM and as long as he is PM he should be treated with the respect that office deserves, I see the same in the USA against their president from the Fox network. I did not agree with John Howard on many things, but I never once saw such vitriol at playing the man.
To me, this is an insult to the country, and to the very roots of democracy. Have a view, say your piece, but please lets not enter into childish insult ryming.
My view by the way is if the rich dont pay their share of tax the burden falls on those less wealthy.
If you wish to check facts and figures, the tax burden decreases as wealth increases. Thatcherism in the UK worked to preserve the wealth of the rich. Now the UK is nearly broke. Another myth is the one that super will fall. Super funds invest world wide, that one really is the cherry on the clowns nose.
One wage, they recon circulates about 3 to 5 times before it returns. You get, you buy which gives wages etc etc. So you need a balance of money being spent to money saved . Another cherry I read was that most of the mining profits return to Aus. Simply not true. BHP is now mainly owned overseas, but regardless, who really owns what, and where they are from would be a maze to figure out. If I were a betting man I would put odds on the Chinese and a few Sheikhs owning a huge slice.
I believe this tax has been badly sold, its a 10% hike in supertax on a finate commodity. What does Aus do when we run out, get back on the sheeps back?

I'd agree that using terms like Dudd are particularly demeaning to the person using them and cheapen the argument, they should not be used. There is a certain level of respect that should be shown to the nations office holders and each other and we should never play the man, especially using cheap insults.

BHP is a staple of many Australian shareholders, and the majority of BHP shares are owned by Australians. If mining shares fall in value it does reduce the value of Australian superannuation funds. Our major funds because of their size tend to take a stake in major players on the all ordinaries relative to their market size. If mining falls in value it has to reduce superannuation. It is not so easy just switching to overseas markets, and the experience of Australian managed funds investing in overseas markets has not always been a happy one.

It is also simplistic to blame the UK's problems on tax breaks to the rich. They are an economy that let manufacturing go and concentrated on its commercial and banking sector which have been hit hard by the GFC. Their problems are not really the result of one simplistic approach to tax spread but go far beyond that including a trade imbalance which is not tax linked at all.

You obviously move in different circles to me. When Howard was in we called him a lot worse than that, especially when he was busy murdering my sport (target shooting).

Personal attacks are not exclusive to any political or social group. I don't vote for these turkeys and frankly I believe our country would be better off with a mob of wallabies in the parliment.

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Originally Posted by damian

You obviously move in different circles to me. When Howard was in we called him a lot worse than that, especially when he was busy murdering my sport (target shooting).

Personal attacks are not exclusive to any political or social group.

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That's true and I'm happy to call a spade a spade, but silly name calling while trying to make a rational argument diminishes or completely eliminates the arguers credibility ... it just makes them look like a bit of a raving nutjob (you know, the sort you see going off on A Current Affair or Today Tonight).

BTW this is not directed at you Damian, just quoting your post.

How about we get back to the debate and end the discussion on individuals credibility.:shutup1::U

HH.