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If the KPMG report found the miners paid an effective tax rate of 35 per cent, then I have no reason to doubt the integrity of the report and it only goes to show the lack of credibility of any claim by the government as to the rate of tax the miners are paying.
Hmmm......it's starting to get rough and the slaps have turned into punches.
Andrew Forrest comments here
I agree with you that if the Treasury figure is substantially incorrect it indicates incompetence or dishonesty. If there are no precedents or ways to measure objectively some assumptions, however, it might be a matter of whom or what one believes, as the article quoting Forrest indicates. The problem is when one of the sides of an argument has the ability to influence future behaviour to lend credence to previous assumptions. And money talks louder than words, especially when the words are incomprehensible to all but a minuscule number of adepts.Quote:
Originally Posted by Waldo
BTW, I am not aware of slapping or punching anybody, I am happy to stand corrected if that is the case.
Figure of speech only Frank but I think you know that.:DQuote:
Originally Posted by Frank&Earnest
I do find it extraordinary that such public people are seemingly quite prepared to call each other liars in the media.
Amen to that!!Quote:
Originally Posted by Waldo
An interesting read on the article you posted Waldo. Looks like the gov. is resorting to well known labour party tactics when it can't present decent, researched and cohesive arguments on its own part.
I listened to more of the balerdash from the ad campaign today. The poor barstewards are so confused thy really can't get anything across. We have them talking about a simpler and fairer tax system without any explanation of how the RRT will bring this about.
In relation to some quoted figures on taxes paid we here a lot of talk about aveagesTo talk about averages in this case is spurious. By the very nature of the beast ( mining industry) some companies will pay more tax and some less. Also there is the inclusion, I surmise, in all those averaged figures of mining activity such as quarrying and "small time" activities like lime extraction and sand mining. The figures given by the gov. are pobably as far removed from the real picture as it is possible to be.
... maybe explainable by the fact that they know they are always correct? :DQuote:
Originally Posted by m2c1Iw
Being a BHP Billiton shareholder I looked up the annual report for the financial accounts for F'09. Here is the link http://www.bhpbilliton.com/bbContent...ements2009.pdf
BHP Billiton pays tax in Australia see P11 "BHP Billiton and its wholly owned Australian resident entities are taxed as a single entity." On page 3 of the same report are the income and taxation figures "Profit before taxation" US$ 7700 (M), "Profit after taxation" US$ 8130 (M) due to a tax credit of US$430 (M). In the notes accompanying the Financial report there is detail of deferred tax assets of US$ 454(M). Current tax payable is on Page 23, US$1413 (M).
Now, my simple maths says that the current tax payable / profit before taxation x 100 is the percentage tax payable. Therefore 1413 / 7700 x 100 = 18.35% Please shoot me down someone using BHP Billitons own numbers because these are the figures that I use to invest my hard earned super and I would hate to think that they are not correct. There are severe penalties for lying to ASIC about this stuff.
I have written to BHP Billiton for clarification as I dont know if the current tax liability includes tax from the 2010 trading year and I would expect the GST liability to be listed separately which it doesnt appear to be. It is also not clear whether the franking is accounted for here.
Someone please shoot me down with maths because the company tax rate is 30% and the tax credit of US$454M only brings the total to 24.25%. When my PAYE rate is 40% Im concerned that I am subsidising a big company.
On a simpler point you will find if you take that subsidy approach you also subsides a lot of workers who get special tax reductions because they work in certified locations. I worked in the NT for a while and got special tax breaks because of the location.
Now you may think that you are subsidising the Big Australian but if the tax rate is less than 30% you can but blame the government as that reduction is provided by them as special tax incentives for being in those locations and lots of other reasons all legal and government provided.
UNfortunately the whole tax argument is clouded by lots of complex pieces that for one the government will not outline because it weakens their argument. It becomes hard for a government to cry that these companies don't pay full tote because the government gives them the special tax incentives.
The companies will not say too much as it clouds the argument from their side.
Sebastiaan, your figures lend support to my idea that aRRT is not necessarily a bad thing. I said earlier that the mining industry gets plenty of tax breaks from the gov.
we should get this back in one form or another over time.
True tax reform would look at all of this, and not try to bulldoze us with the RRT in its current form.
But why oh why, should anyone pay more tax after having paid tax on their income? :? :? :?
Beats me Waldo, but that is not my point.Quote:
Originally Posted by Waldo
the miners -and others- get tax breaks and other concessions. As I see it we are helping to prop up their profits. Some way or another this should come back to us.
Properly thought out, implemented and administered a RRT could do this.
Perhaps if we thought of the concessions, in whatever form they are give, as loans we might get to see this more clearly.
I don't know how to reform the tax system, but it has to be done. There was a proposal put forward by Doug ANthony some years back whereby he wanted a flat 20% tax rate. Maybe that would work.
Governments should alsolook at how much money they actually need and ways to spend it less wastefully. For instance, is there a NEED for stamp duty - of any sort on anything.
On this point, I have no objection to paying taxes. I just want to see the money used wisely.
Sorry or the rambling and jumping from point to point..:B
But we all get tax breaks, we all get to right off capital expenditure, so we aren't propping up someone solely.
I have two major problems with Dudd's idea:
• Dudd has decided that because he can't balance the books and to produce a budget that he has to do it by two taxes, one on mines (and it's not just the big fellas it's also on lime for cement) and one on tobacco. Without which he has no budget, or very little at least; and
• the mines pay state royalties on top off all the other taxes they pay, so they aren't getting something for nothing, we don't own the stuff they mine the miners do. If the states thought they were being ripped off before they would have increased royalties. But Rudd wants his share. And it's not a case of they should share their wealth because Dudd thinks so. They've paid for their wealth, they have invested massive capital, they pay their taxes etc., they invest back into the country (hell, take away our only real export and see how good the economy will be after that), their share price (of which there are 6 major companies on our stock market) that puts $ in our superanuation (now play with that and see what money you have at 65 - a friend of mine has lost at least $20K already because of Dudd'd grand tax idea)
A third one:
• Dudd get's the super tax through - then there exists a precedent for s/taxes on other industries and it could well happen. How much do you fiddle with an economy before you really kill it?
:shrug:
I respect your opinions, but there is an error of fact: "we don't own the stuff they mine the miners do". Minerals are the property of the Crown. The whole logic of the tax is predicated on getting a better price for the little bit of sovereignty we let them take away.
And they pay $1 in $7 in royalties. That sounds fair.
Canada, South American companies are rubbing their hands with glee and some economists are stupefied.
From KPMG
Tax to drag on mining industry for '100 years'
Yep. They are haggling over the price. :D The question now is: is Australia greedy or the other sellers the mugs? Maybe you are too young to remember when the Arabs realised they were being screwed and doubled the price of oil overnight. :wink:
Not according to BHP's report, ""BHP Billiton and its wholly owned Australian resident entities are taxed as a single entity."" but not the point really. I agree, Rudd is a loser. But I still think that whatever government gets in will have to increase the overall tax take to meet upcoming baby boomers as they retire. And anyone who is going to get taxed more is going to bitch about it. Me included. But with the way the economy is in NSW its all a bit arbitrary really. Our business is going to post its first loss since we acquired it and half of Silverwater will be the same by anecdote. Miners may be doing alright but we are suffering. The only consolation is the fact that those idiots who are our Govt's will have less of my money to spend. Sorry Waldo bit a of a hijack I know.Quote:
the mines pay state royalties on top off all the other taxes they pay
Nobody has lost any money because of RSPT.Quote:
Originally Posted by Waldo
Article
For those with limited time:
Quote:
During May, the industrials index of the ASX 200 plunged by 11.2 per cent
So that means...ta-da! In the worst performance in 26 years, the mining sector still managed to whether the storm in better shape than most other industrials.Quote:
The materials sector, which encompasses the major mining companies, was down 5.9 per cent
If one does the background reading you will find that:
1. The mining companies want to get rid of royalties as they are different in each state and vary per mineral extracted per state. This is a complexity to the taxation process they have to work with and basically messy.
2. No where have the mining companies objected to paying a Resource Super Profit Tax (RSPT) or call it a Resource Rent Tax, (RRT) as such. In fact they are happy with just a single tax so long as it eliminates the current Royalties tax.
3. All companies pay a base level companies tax of 30% but some have more concessions than others and these concessions are defined by the Government. Simply the Government can not cry about this as it is their own doing noting to do with the specific companies paying less.
4. The mining companies object to the current RSPT for several reasons and in a way valid.
4.1. The new tax is retrospective. This means all existing project/mines will be hit. Note these mines were designed, financed and developed on the basis of the existing taxing system and did not profit wise provide foe an additional 40% slug over 6% of base profit.
From what I have gathered so far this super profit tax is going to come in on profit before interest on financial borrowing payments are met.
The end result is less capital to spend of future expansion. Note each expansion is a new project under this RSPT. Overall not conducive to expansion.
There are many on the financial edge mines at present either within big companies or just the little miner. Most of these mines will close.
4.2. The 40% coverage by the government for a failure of a project is not being happily accepted by the various financing sources the mines use. There are a few reasons, the most notable is the lack of guarantee a government will want to fund a billion dollar loss. It would be a political death hole.
4.3. The modelling used has not reflected real world financial approached that miners use to obtain finance or conduct their operations. This has lead to some poor evaluation of the overall approach to the tax design.
4.4 The base point of 6% or the long term bond rate is very low at present 6%, and this will have ramifications on end profit and hence finance payments, and how far a company is willing to expand with new projects. Reduce the profit and hence you reduce future operations capital.
4.5 The real lack of consultation with the industry by hennery in his report that developed the concept of the tax. The lack of consultation by the government with the mining sector when drawing up the tax model.
5. The mining sector would be happy with a RSPT based along the lines of the PRRT. Note this tax has a 40% profit loading and also has no retrospective provisions. It also has a base profit line at Long term bond rate plus 5 odd percent making it at roughly 11-12 % before the super profit cuts in.
Notice the off shore petroleum industry does not pay royalties as these are in federal zones not state ones.
Of topic here:
With company tax being reduced from 30 to 28 odd % as the base rate will only affect those companies which are incorporated etc. So little ones which are say family run business, partnerships etc will not get this reduction. Now throw in a compulsory super from 9 to 12 % that these little guys will have to pay and they will get hit badly.
Bye-bye little guy.
Back to topic:
If Rudrless and his kitchen cabinet has bothered to sit down with the mining industry by now he would have had his RSPT, his 40 % and his budget balanced. At present he has a whacking hole in his budget through gross arrogance.
Though some may not realise it such mines as the cement mine at Ardrossan, the iron mine at Whyalla will possible due to the current version of the RSPT go bottom up. This is because the mines sell the mineral form one department to another at production cost. If it was at market cost they would not be able to operate.
A similar concept could be applied to the Pt Augusta power station and its Leigh Creek coal field.
That is 3 industries within SA at possible closure risk.
Sorry went on a bit..
That means stuff all if you are relying on some form of managed retirement fund as you only source of income. Share value dictates you available $ worth.Quote:
Originally Posted by q9
If that value goes down you have lost that much. It can only be regain if the share value goes back.
Well done Cultana!:2tsup:
Those are the sort of facts we need to consider.
If anything this RRT proposal has simply shown up the incompetence of the gov. and its boundless arrogance.
What is needed, apart from decent tax reform, is for the Krudd government to be given its Swan song at the next election.
Nice summary, at a glance you appear to broadly agree with the Professor. I have a philosophically different attitude to the "consultation" process but all the rest is the sort of things where values will vary differently depending on perspective, especially the already mentioned 4.2. If indeed the tax is retrospective, blame a legal system that allows this to happen. More civilised countries respect the principle nulla poena sine lege.
I am not really sure about your assessment of the impact of the 30 to 28% reduction and the 9 to 12% increase on small businesses, IMHO it is way overstated. Incidentally, inc. does not mean big. Ask your dentist, chances are the practice is incorporated even if it is a one man band.
Ahem... isn't this the kind of blatant partisan propaganda that should be frowned upon by the moderators? :DQuote:
Originally Posted by artme
I would agree with you if we had a decent alternative, like Turnbull for example. But I would never vote for a rabid bigot like TA. Malcolm Frazer is my current hero, I pray that he would found a party I could be happy to vote for.
Frank,
I only agree with the Prof by accident not from reading his paper and then agreeing to his point of view.
I could say he agrees with my views:D
Perspective is an odd one. Yes if I was looking at some general business the 40% covering a flop venture would be a good backing. Unfortunately in mining the concept of a flop is huge. Also since it is legislation there is no guarantee it would not be removed buy successive governments anyway. That is one of the uncertainties with it. Since it involves $billions not $thousands the chance of it being withdrawn is on the cards so it is not a sound basis to go look for finance.
The use of retrospective is an odd one and nicely banded about. All this actually means, and its clarity also seems to have vanished in the mumbo jumbo, is that existing projects will be included. The PRRT excludes preexisting projects.
As for the inc matter with the company tax all that I hoped to point out was that unless a business was actually inc'ed it would not see this reduction. That was pointed about very early in the budget/tax reform debate. Since then it has dropped off the horizon.
Yes doctors, dentist and similar practices are usually inc anyway. But the local deli, the small sub contractor running his truck and bobcat and the like may not be.
Sorry Cultana, I meant "coincide". Blame my imperfect English. :D
If that is what "retrospective" means in this context, I have no problem with it, but I do not accept it as a correct use of the word. Blame my presumption of knowing what good English is. :D
Not really blatant or partisan Frank, althought I understand your humour. I was fed up with Howard towards the end.It hasn't taken as long for me to be fed up with these incompetent nongs.Quote:
Originally Posted by Frank&Earnest
Agree with you on the leadership issue. It seems as if we are caught on the horns of a dilema. Painful!!
While I think Turnbul may be more acceptable I wonder about him also. Look at the performance with Godwin Gretch. I also don't like his approach to becoming a republic. I'm in favour of a republic, just not his model.
Boy this thread got a lot longer in a day didn't it ? Good that your all remaining so civil to one another. I may have missed something but most of you seem to be trying to get your heads around the problem rather than having an idealogical debate.Quote:
Originally Posted by Waldo
Sorry Waldo, I don't have a link. Bascially he was asked about the mining company claims and said something like "I learned in high school economics that a profits based tax can not impact prices so I don't think I need comment further on that". Utter BS. Just what you'd expect from a do nothing go nowhere public service academic. I'd love to see that SOB kicked out into a private business where he has to make a living.
Also seb' I think mentioned that we should consider how much money the government needs in any discussion about how they raise it. I think I was trying to make that point. Labor governments are tax, spend, waste governments. Even Hawke did his fair share of that. They bleed us dry then pass the $ off to their mates via cushy jobs (Mike Keiser anyone ?) and overpriced contracts (school halls etc). They are little more than a conduit from your wallet to their mate's swiss bank accounts.
Sigh. Mr Cranky needs a lie down....:)
Damian, you certainly have a slant against labor, but seem happy to ignore those same traits within the coalition. Personally I don't particularly like any of the political options we currently have, but to even consider the current coalition as a viable option is almost laughable.Quote:
Originally Posted by damian
Don't digress folks.
They need as much money as it takes to get reelected :D What we call government in Australia is basically a set of policies decided by opinion polling. That goes for both L's, I make no distinction. Rudd buys school halls and insulation, Howard gave it away as middle class welfare and advertising the GST, no difference at all IMO. When Howard got kicked out he left a massive budget surplus, IMO this is where everyone of us was over taxed. The GST was a giant tax grab, probably the biggest in the history of the federation. To claim either party as a paragon of virtue and the other as the very evilist naughty baby eating barstools seems simplistic and propaganda to me.Quote:
Originally Posted by damian
Your question is valid. What is the role of Govt? Its a bit like a comment I heard once that a human is basically a transport mechanism for an alimentary canal. The country has become a fund raising mechanism so that two parties can play politics in Canberra. Neither seems particularly interested in what we really think or what the country needs now, in ten years time or in one hundred years time. The horizon and purpose of the L's is the next election and dragging the other through the mud.
The L's are like two sides of a coin. The Lib's fundraising base is big business. Its cohering value is hatred of Labour. Lab's fundraising base is the Unions.Its cohering value is getting one back on the bosses. Remove either big business or the unions and the other loses its ideological reason for existence. And yet they need each other, better the enemy you know.... I read Miranda Devine's spray in the Telegraph the other day (a very conservative commentator) and the lady was at her hysterical best about the rising threat of the Greens. At least the Labs/Libs can be attacked in the usual way and the Labs/Labs attacks can be defended in the usual way but there may be a new voice in the national debate and that will be a big threat to both of them. Im not advocating the Greens, Im attempting to point out a state of affairs.
Maybe it's the influence of some red I had tonight but I don't know whether to treat your comments as cynical Seb., or regard them as truth.
I think it is fairly clear that both sides of politics have forgotten why they are where they are, or maybe they never knew.
Well my two bobs worth on the matter as a swinging voter is this.
Basically Rudd has screwed up so many times before this and now he has to go with it come hell or high water.
I fear him and his two consorts Swann and Gilliard are of little use to the country as well.
As for Ken Henry. I see that he reckons there would no difference if the tax was 40 or 50% in fact he went to agree that even if it was 75% it would still be no difference on its out come. So I will add him to the list above as way to expensive to be any near my tax dollars for any reason.
The highlight, for me anyway, of this "debate" in parliament came yesterday when Bronwyn Bishop (not my favourite politician) addressed Julia Gillard (dressed in a hideous hounds tooth coat) as "the member for David Jones".
If looks could kill Ms Bishop would be heading for a state funeral:D
Quote:
[he highlight, for me anyway, of this "debate" in parliament came yesterday when Bronwyn Bishop (not my favourite poltician) addressed Julia Gillard (dressed in a hideous houndstooth coat) as "the member for David Jones".
:2tsup::2tsup:
I'm pretty sure the context of what he was saying was related to the price of the commodities being sold on the open market, in which case he has a point. If they threw a tax on some inputs, then the commodities would become more expensive ie it would artificially inflate the price of those commodities.Quote:
Originally Posted by damian
Thus the commodity achieves a smaller return for the investor, exactly the point the miners are making and it follows the capital will be moved elsewhere.Quote:
Originally Posted by q9
Correct me if I'm wrong but I don't believe Australia has the only deposits of the many mineral/elements we mine.
As a side note what happened to the 5.5billion from the bank deposit guarantee fees? see this article
Yes Damian, Ken Henry might have been flippantly arrogant (I can't cast the first stone :D ) but you can't say he was wrong. On what do you base your assessment?
m2c1, I do not think anybody is denying that, the point is what level of taxation gets more eggs without killing the goose. The argument that other countries would tax less is rather spurious IMO: would you like to live in a South American country where miners are taxed less because the local potentates get huge kickbacks and the populace goes hungry?
To lighten the matter, do you remember the joke about the pub dare where big blokes were trying to squeeze the most out of a lemon? A bespectacled weakling got the most out and revealed being a tax auditor. Then an even smaller man came forward, took the sqeezed lemon and wringed a last drop out of it. Gasps of astonishment. "And what are you?" "A divorce lawyer'. :D
Well a Canadian pollie (OK conservative :rolleyes:)was quick to announce that they would "cash in Australia's blunder".Quote:
Originally Posted by Frank&Earnest
What level of taxation? Well Ken Henry says the rate matters little (he can't be serious) according to this column by Terry McCrann and no I would not like to live in South America and I don't see the relevance unless adding weight to the argument that investment will go overseas (kickbacks cheaper than Super Profits Tax:U).
Mr. Rudd is quoted as saying this tax is to enable the government to reduce company tax (sometime in the future maybe) and assist small business (under $2m turnover, that is small) offsetting the increase in the super guarantee payments made for their employees. All very noble and vote winning.
IMO it was hastily plucked out of the Henry review to plug a hole in a very leaky budget.
A terrific question, BTW has anyone actually every seen a balance sheet or consolidated P&L for the Fed's? Should be published every year for all Govt's I reckon. It took me about 20 mins of work to get and digest the BHP document the other day. Why cant we do the same for the Govt's?Quote:
Originally Posted by m2c1Iw
Went into a black hole????Quote:
Originally Posted by m2c1Iw
Funded some of Seb's cynical conclusions.???
Helped to repay the advertising bill supporting the RRT???
Both south and north America, Africa, eastern Europe and Asia, particularly around Mongolia have large mineral reserves. We are well placed because we have good infrastructure, stable government, no civilan unrest and developed mines. This is what sovereign risk is about, miners just don't go to countries that have a habit of nationalisation of mines or for that matter restrospective taxation habits. They want some certainty that Government has the integrity to stick to the rules and not shift the goal posts to far. The complaints aren't really about paying a price for the minerals as they already pay royalties, or even about more of a tax take. The complaint is that mines have been developed on the expectation that in this country we do not tax retrospectively and that not only is this tax retrospective as it taxes existing mines, but also the facts the government has used to support its argument are false, it has not consulted and the details it has released are very incomplete.Quote:
Originally Posted by m2c1Iw
The miners want to talk with the government and be heard, its about consultation, its about policy made on real facts in which everything is considered and a balanced judgement made. This mining tax clearly has been hastily put together, and both Rudd and Swan are not interested in listening to anything but the sound of there own voices, and that is not the way we expect politicians to act in this country.
When Fraser brought in the high petroleum taxes it only applied to new fields not existing ones. There was a recognition that to do so was not in the countries interests if it wanted continued exploration. This view is lacking in the current debate, as is any attempt by either Rudd or Swan to actually listen to grievences about this tax, high handed behaviour only gets peoples backs up as does the use of false data and lies even if the lies are simply because you don't know what you are talking about.
I actually think an approach more like the Hawke years would actually see the country picking up a greater share of mining revenue than it is, without the vitriol. I expect our leaders to conduct themselves in a more contrite manner and not use spurious figures or purile sound bites in matters of national importance, this isn't a minor issue it could have a major impact on the country if we get it wrong. It has the potential to kill the one industry that has actually brought our balance of trade back into the black for the first time in a couple of decades and it's importance should not be under estimated nor the need to do more to correct our trade balance problems.