Mining Super Tax

[HappyHammer]

But this whole argument from the mining companies is based on the suggestion that this is a "massive" tax burden, they are making it sound like a whole new tax rather than an increase to current taxes. It's the same as making a change to personal income tax by raising the top level of tax paid by the highest earners or introducing a new level of tax for the people that earn massive amounts.

Would you argue against a new tax grade that cuts in for personal income tax for people earning > $250K per year where they pay 55% tax on earnings over that amount?

HH.

[Waldo]

It is a massive tax burden for the very reason Forest said on Lateline and which I quoted. Forest is more than willing and happy to pay tax, look at the figures he has quoted he expects to pay. But, when it is discriminatory, as he has pointed out, a glass ceiling is created that business won't be viable beyond a certain point. And further the s/tax is not viable past a certain point anyway as mines have a life. Dudd has made the assertion that mines have an infinite life. What will he do when a. there is a bust, or b. mines reach a point that there is less tax payable, start a new super tax on another industry?

Which leads to another thing for consideration. Markets react to expected budgets of a country, or business for that matter. If a country, and as it is happening right now in Europe, fails to deliver a surplus based on expected levels, their currency is sold and moved to stronger areas. What is happening to the Aussie dollar right now? And several economists on Lateline Business have pointed out as to why. Take a guess.

(I'm not making personal attacks)

When anyone is hit with a higher tax rate just because they earn x, then what reason is there for them to attain such a position of employment that they reach that percentage of tax payable?

Dudd had a chance for real tax reform and he didn't take it, he took the path of something which he thinks that the public will love - the tall poppy syndrome. Each week I put aside a % of my income aside at the highest rate in a separate bank account so that I cover my commitments to paying BAS etc., just in case my income hits a certain level come end of the financial year. Now if I don't hit that level of tax I have the money in the bank that comes back to me.

[HappyHammer]

When anyone is hit with a higher tax rate just because they earn x, then what reason is there for them to attain such a position of employment that they reach that percentage of tax payable?

I don't know you would have to ask people who earn big salaries where the tax rate is the same for earnings over $180K regardless of how far over you go so you pay the top rate up to an infinite amount. Is that fair, I'm not sure....

I agree that maybe Kev could have thought about it a bit and applied it to all company tax over an extraordinary amount of profit rather than just mining. It just sticks in my throat a bit that the mining companies are trying to convince us they are taking up this battle for the blokes that work in the industry and mums and dads super when it's more about profit margins and major shareholders not mums and dads.

I think the problem now is that if he completely backs down and does not implement this tax in any form then his credibility will be shot so he's backed himself into a corner. We all know that bad decisions are based on politics all the time just look at the NSW state government.

HH.

[Waldo]

But it will hit mums and dads, namely their superannuation funds, which rely largely on the big 6 Australian companies on the stock exchange.

Investors no longer invest, they pull out to invest in other markets in other economies, share prices fall, and we pay.

Investors pull out, the level of an mine is reduced in so far as output of a mine, you need less employees. Look in Queensland and Axtrata (however you spell it)

[Waldo]

I think the problem now is that if he completely backs down and does not implement this tax in any form then his credibility will be shot so he's backed himself into a corner. We all know that bad decisions are based on politics all the time just look at the NSW state government.

HH.

but at some point the bulb has to click on and Dudd has to surely think, "hang on, what are the affects financially and globally to my belligerent super tax and the way I want to implement it?"

[Waldo]

I had a great laugh at this last night from Lateline momentarily, then sadness for Australia.

GERRY HARVEY, HARVEY NORMAN: He's selling himself as "Fair shake of the saucebottle mate" - which I've never heard anyone say. He's trying to be somebody he's not and people are saying 'This guy's a fake'.

DANA ROBERTSON: Where ever he turns Mr Rudd's being belted by billionaires - even the ones who support the super profits tax.

GERRY HARVEY: The way they presented it, the timing - and you just think 'These blokes are bloody amateurs'.

[johnc]

ANDREW FORREST:
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.

The super profits tax cuts in long before the costs are recovered and the banks repaid. It's not scaremongery, it's very straight forward, this is about cashflow. The SPT will simply make it harder to obtain funds and make some mines not worth the risk. Companies gamble (forcast) on future commodity prices that rise and fall with the business cycle. In any study you would not forcast prices and demand to remain at these levels forever. The greater the repayment time frame, the greater the risk and the less likely you can put a case forward to get this off the ground.

Those who have indulged in property speculation and capitalised on our very generous capital gains concessions can pay as little as 12c per $ on their windfall and at best 24C, employing no one. Why should these speculators who have done so little be so well subsidised when someone who actually takes huge risks and generates employment as well be hit with a slug of up to 58.5c. Rudd and Swan have gone for the sound bite, the tax as Gerry Harvey said has been sold by two amateurs, who aren't trying to reform anything. This is about hitting a soft target to fund other spending.

[Waldo]

Very well written.

[.RC.]

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.

Think of all the laws the single government could bring in nation wide if it could....

Look at the customs regulations for instance, where the federal government has banned importation of certain things but they are legal to own and make in the various states..

Think of the environmental laws one single government could bring in.... The banning of all wood work unless the timber has paperwork to prove it came from a certified plantation area..

[artme]

Excellent post John C!!

This is a brilliant example of why the WHOLE tax system needs reformation. It brings into focus several salient points and brings us back to the terrors and stupidity of cherry picking.

I remember - as most of you probably do - when there was no such thing as CGT. Remember the cries when that was brought in? Are we really any worse of for it? I think not.

And the GST that is STILL decried by so many people.What Codswallop!! The GST brought a government tax winfall, it stopped a lot of rorting and many business blessed its introduction because of its simplicity. We are still reaping the benefits of Gat and I don't see many whinges from the states about the flow of cash because of it.

[kiwigeo]

Would you argue against a new tax grade that cuts in for personal income tax for people earning > $250K per year where they pay 55% tax on earnings over that amount?

HH.

I would argue against it. Such a tax would result in people like myself working less days in the year and making worse an already chronic shortage of experienced people in my line of work. You see there are valid reasons why people in the mining and oil and gas game get paid more than the average nine to fiver.

[cultana]

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.

Yep get rid of the sate government level and you will just get more federal politicians, more travel costs and more perks handed out. Great win somewhere.
If you want to easily abolish any form of government you can legally do away with your local council. They are not part of the constitution.

The mining super tax if, and a big IF, done correctly will not cause disruption to anything but the profits levels of mining companies. But at present it has not been handled properly nor really discussed to see how it should be implemented to the benefit of all concerned.
At the present point in time it is only disadvantaging everyone, especially us poor sods living on our retirement funds.

It was pointed out in one of the papers that the majority of share holders in BHP are in fact Australians, either as individuals or via their retirement funds. But heck it does not matter about them especially the self funded retired lot as they are all fat cats even if their yearly income is about $25000 from their retirement fund.

[kiwigeo]

It was pointed out in one of the papers that the majority of share holders in BHP are in fact Australians, either as individuals or via their retirement funds. But heck it does not matter about them especially the self funded retired lot as they are all fat cats even if their yearly income is about $25000 from their retirement fund.

A couple of comments:

1. You make an assumption that all people running their own super funds are taking income from same. What about the people who arent yet retired and who's funds are still in the accumulation phase.
2. You make another assumption when you imply that people who run their own super funds are "fatcats". What about people like myself who got sick of fund managers losing my money even when the share market was booming and decided to take control of their own retirement investments?
3. In case you hadn't noticed Australia has a rapidly aging population and we dont have a hope in hell of supporting same in years to come solely with the pension and other taxpayer funded benefits.
4. I could blow all my pay and live like Larry so I qualify for a pension when I retire but I believe if you can afford it one should fund their own retirement to their full capability. This is another reason I run my own super fund.
5. Living on an income of $25,000 is hardly the life of a "fatcat". Like a majority of Australians I suspect that you haven't taken the time to sit down and work out a). how much your current annual living costs are and b). how much you'll need to have saved when you retire to meet your living costs in retirement (don't forget to factor in inflation).
6. You assume that the dip in mining stock prices affects only self managed super funds. It also affects retail funds that alot of people on low to middle incomes have their SGC tied up with.

Cheers Martin

[m2c1Iw]

But heck it does not matter about them especially the self funded retired lot as they are all fat cats even if their yearly income is about $25000 from their retirement fund.

I could be wrong but do I detect a note of sarcasm.

[kiwigeo]

Er yeah right....sarcasm..yeah ok.

I'm going to leave my post up anyway for those people who do think that people who run their own super funds ARE fatcats......and also as an excellent example of what can happen when you dont read a post properly