Rudd’s mining tax sinkhole

Joan says:

08:00am | 31/05/10

If the country is in debt Rudd should increase GST and spread the burden. The Government is wasting taxpayer money on Advertising -proposed SPT   the information on page 7 of Australian does not explain anything - just tells us what we know, it doesn’t explain the 40% SPT and the 40% loss guarantee.  Do we need to increase taxes to pay for this type of lack of information-?  same with Medicare ads - a person learns nothing -  just another promise that things will be better- if the medicare ad said that every hip relacement will receive surgery within 8 weeks of diagonosis there would be some meaning - it doesn’t -they say nothing.  Both Ads are a waste of taxpayer money as no real new substantial information is provided.

djc says:

10:22am | 31/05/10

What’s Austria got to do with this?

Swinging Voter & Former snag says:

12:29pm | 31/05/10

JAN & Joan, Everywhere i go ordinary EX Labour voters & swinging voters say. What about the Banks, CEO’s, or any rich person?

They are not stupid, they know this is just another grab at a soft target, like smokers.

Why can’t we simply have an increase in personal income tax rates for high income earners? Say over 200K or there abouts? Or a wealth tax, set high?

Evan Findlay says:

12:55pm | 31/05/10

Joan,
The problem with your comment is that the electorate would find it unpalatable to be slugged extra on the GST to subsidise a reduction in the corporate tax or to pay for infrastructure that is going to benefit the mining industry.

As for your lack of understanding of the proposed tax I think it demonstrates more about your inadequacies rather than the policies.

John A Neve says:

01:26pm | 31/05/10

Djc,

Austrai has nothing to do with this issue, my bad typing does. So just don’t make a mistake smart a**.

John A Neve says:

01:33pm | 31/05/10

SV&f snag,

Just why should “banks, COE’s or any rich person” be taxed more than any one else?  We all benefit from what our country provides.

All this tinkering with our taxation system just impacts on single groups and causes further division.

Why not fix the taxation system?

Joan says:

02:29pm | 31/05/10

Evan -give me a known value GST rather than ask me to take on guarantee of 40% unknown losses- mining company or any company. It is up to Rudd to get right GST mix with States - but that is impossible as Medicare debacle shows- anything more complicated than $900 handout is impossible for Rudd and Co to get right ` As for your lack of understanding of the proposed tax ` looks like the SPT advertisement is a failure

Evan Findlay says:

05:14pm | 31/05/10

Joan,
I have no problem understanding the tax. You are the one who openly admitted to a lack of understanding. You seem to nestle firmly within the a certain demographic of our electorate that subscribes to the notion that if you can’t understand it, then denigrate it. Would it not be more fruitful to do some reading and research and gain a better understanding of it? It’s easy to be negative, it’s easy to be ignorant, but it achieves very little. Tony Abbott is a perfect example. It’s a bit rich to blame a government for your lack of understanding.

You obviously have failed to research any aspect about the tax. The initial submission of a profits tax to the Henry review was by the mining industry. They know they pay too little tax, their grievance is at the percentage of tax Ken Henry has suggested, the rate or level of profit before the tax kicks in and that the tax is retrospective, which it is not. It would be retrospective if they had to pay on mines that had been exhausted or closed but mines that are currently operational are not retrospective as the mining council would like you to believe.

I also fail to understand your point about medicare. Are you referring to the healthcare adverts? There is a big difference between healthcare reform and medicare!

persephone says:

07:04pm | 31/05/10

Yep, Joan, the ads have been running for a day and they’re a failure.

And why increase the GST? What’s wrong with imposing a tax on profits which are far higher than even the mining companies expected and which they don’t have to pay if they don’t make a profit?

At present, miners pay tax in the form of royalties regardless of whether they make a profit or a loss. This tax will be (effectively) removed, immediately reducing miners’ tax bills by 6%.

They get a further 2% reduction in their tax rates due to the reduction in the company tax rate.

This means that, if you compare apples with apples, they have to be on at least a 10% profit margin before the new tax starts costing them more than they pay at present (and even then, it’s only marginally higher).

Good taxation takes from those who can afford to pay. These companies will be able to pay the tax and still be able to make massive profits.

And if they don’t make massive profits, they don’t pay the tax.

Keith says:

07:45pm | 31/05/10

Joan, if the country is in debt, then Rudd should stop spending. It is more Government’s fault in overspending our tax dollars. Why should the Australian population fork out more for the Government’s economic mismanagement?

We ought to be looking at the root cause of why we are in debt. It is simple. It is because we are spending more than we are earning.

Joan says:

08:56pm | 31/05/10

Evan - my grievance is taxpayer funding 40% mining loses- I don’t guarantee anyones future loses why should I do it as taxpayer?  I`m so ignorant nestled in my cocoon - just shows how bad the million dollars worth of ads are for Healthcare.Medicare, and SPT - I am no wiser than I was before the government ads. What a biiiiggg waste of money

Wayne Fehlhaber says:

07:59am | 31/05/10

persephone :  yeah and black is white !
It has everything to do with Rudd trying to claim the fiscal conservative tag . Not a snowflake’s chance in hell pers. !
Suddenly it’s not fashionable for a Labor government to leave a crippling debt. ?
The reality , pers is the RSPT is designed to refill the coffers emptied in Rudd’s frenzy of lunatic style spending .
Think Labor are having trouble with the media eh ?  Hmmm well now you might find a lot more difficulties arising since the electorate has woken up to the fraud that has been perpetrated on them by the Rudd excuse for a government.
Oh and pers , i don’t believe that the budget would be in the black in the time frame outlined if the RSPT fails to materialise. Labor have never left office with a surplus in the history of Federation.

antiperspirant says:

08:30am | 31/05/10

Oh grow up and get a brain. I see the Labor offices opened early this morning. Press on the weekend a bit worrying? Troops called in to start the spin ASAP I see. Polls looking sick?

As you well know pers the Budget is a complex thing. Something as central as this great big new mining tax cannot be taken in isolation.

I can tell you what doesn’t happen. They do not have a tin called New Mining Tax that they put all the money they get from it specifically in and then disperse the funds from there to the “nominated” sources. It goes into consolidated revenue and you know it.

The budgets bottom line is reliant on this great big new tax. To change it affects the whole budget and their (snicker) “promise” to get us out of deficit. Without this cash they are stuffed and they know it. It is typical Labor all over. First they spend and waste like mad then tax to get it back. Nothing new really.

Such deceit so early in the week. Well it follows on from the advertising blitz. Labor spin, rhetoric and lies. It never ends.

When will the backflip come? This will actually bring Rudd down now his full hypocrisy is on show “front and centre”.

watty says:

09:08am | 31/05/10

A panel including Green failed candidate and zealot Clive Hamiltom reporting to Rudd was giving a “fair and balanced” run down on the proposed “super tax” Are you effing kidding?

Henry and Rudd saw the mining industry as an easy target to run the usual politics of envy ,rich v poor against.

Unfortunately both forgot the “working families” employed in the supply industries servicing the resources industry or with super funds and even small parcels of shares in the mining industry.

If ‘super tax” is such a great idea then it should be applied equally and fairly to banks,airlines,IT companies etc not just applied to one industry.

The problem you and Rudd seem to have is that the media HAS been reporting honestly highlighting the depths Rudd has plunged to and the lies he is prepared to repeat in order to preserve his ego.

$38,000,000 in “emergency” money to explain what Rudd and Henry thought was going to be a walk in the park.Now is THAT dishonest reporting?.

JA says:

09:18am | 31/05/10

persephone

Despite the merits or otherwise of this tax Rudd has mismanaged the entire issue.  Working families now (quite corectly) hold Rudd responsible for their falling superannuation returns which will start hitting letter boxes in 30 days or so.

Most. like me are wondering why under Rudd we have to choose between a healthy mining industry and budget in surplus. 

Under John Howard we hade both of those for 11 years, and tax cuts on top - what has canged?.

Keith Hammersmith says:

09:31am | 31/05/10

Er, no. 
9 billion dollars in extra tax from any industry is not going to ‘expand it’. Thats just simple logic, and for every economist that is for this tax we have several that are against it, along with the Australian people and the sector in question.

How can you say it has nothing to do with paying of deficits?  We are currently borrowing $700 million a week, this from a surplus not 3 years ago. The budget does NOT return to surplus under labor with out this tax. 
To add to our debt, Labor has gone againts its own rules and declared this an ‘emergency’ and going to make the tax payer pay to sell something that is clearly one of the biggest election issues at hand. I know union enrollment is down, but they still must have some of their own money to fund their own election campaigns?

Super D says:

10:39am | 31/05/10

So these guys “doing their job properly” would be to swallow the Governments propaganda regarding this disastrous tax which will drive investment offshore?

John A Neve says:

01:40pm | 31/05/10

Wayne,

Just for one minute forget the rights or wrongs of the situation. Tell me who should pay the additional tax?

The PAYE taxpayer or should we increase the GST (can’t be done without the states consent), mayber increase income tax, re-introduce Death Duties, come on Wayne, tell us?

The mining companies are making mega bucks out of the countries assets. Either fix the taxation system or let them pay.

Wayne Fehlhaber says:

06:07pm | 31/05/10

John Neve :  the GST is in place , all states are Labor except one ,
a hand made soft shoe for federal Labor if ever there was one , just one thing wrong John , Labor has no guts . The Liberal party defied all comers and risked the wrath of the softies by introducing GST which is now widely accepted. The fairest tax of all , set in place , ready to go , the consumer pays , the more you have to spend , the more you pay , or if you don’t wan’t to pay , don’t spend.
Just don’t vomit up more on your beloved FDT John , we have a fair taxation measure in place , use it. !  The Rudd Labor govt. blew the nations money and they have the tools right there to replace it , no guts,
They fought tooth and nail to stop it , now in govt , they make no attempt to remove it because they know it was and is a fair measure of taxation for everyone. The ball is in their court , it’s their time to hit the ball but they are gutless wonders , don’t want the unpopular move to be theirs to make. Gutless. !

persephone says:

09:06pm | 31/05/10

I can very easily say this tax has nothing to do with reducing the deficit because it hasn’t.

The income from this tax is going to some very clearly identified programs - the infrastructure fund, super top ups, the 2% tax cut for business, the asset write offs for business, and so on.

If the tax isn’t raised, then these programs go ahead, so it’s revenue neutral.

Not one cent of the tax goes towards underwriting current government programs or debt reduction, so it has nothing to do with the budget getting back in the black.

John A Neve says:

06:03am | 01/06/10

Wayne,

You seem to forget the GST money, is the states money, increasing the GST will do nothing for the national debt.

But all these little quick fixes, let’s hit the smoker, then we can hit the drinker, how about we add a few dollars to passports etc. Sorry Wayne our taxation system is far from fair. The bigger the business the less they pay proportionately. Just think 126 taxes and you call that a good system!!!!!

luke09 says:

12:49pm | 31/05/10

A federal labor government means debt. I don’t think they have ever been a government where there was no debt.

Australia Inc. says:

07:53pm | 31/05/10

Agreed.

This country ought to be managed like a company. The problem with our government is politics of people wanting power. Usually it’s a squabble between the people who’ve studied “Political Studies” or “Arts”.

We ought to run this country with the best talent we have. For example with Doctors, Engineers, Company CEO’s and Lawyers. We need leaders with actual industry and corporate experience. We need a government who can operate like a team.

Look at China Inc. Most of their leaders are Engineers.

antiperspirant says:

01:13pm | 31/05/10

Awesome Don.

I hope you are in business. I hope you have done well. I hope all the risks you took over the years mean that you have a healthy balance sheet and a super P&L and are paying tax at the rate to which the system requires and allows you.

All of the above is sincere. As is what follows.

Now I hope Rudd calls you up and says (cue creepy voice from 7.30land)

“Don thanks for doing so great but I am in a pickle, need some cash with this spending thing I am addicted to. So what we thought is if we allowed you to earn the bond rate and become your silent partner for the profit in excess of that and take 40%. Now I know that you have taken all the risk, invested (historically) all that capital, done all the work, written off the losses and depreciated the good stuff but we still think that your so good that we deserve a stake with no risk. Oh by the way Don we will underwrite (snicker) your losses in new ventures because we know you always plan to fail and we love an underdog so go let her rip mate. Oh I know Ken said it was like a government bond but don’t tell the bank that because they will not lend off it anyway and I wouldn’t want Ken to look like a dill for talking up a nonsense. We will still be there after you sort the risk to grab our pound of flesh later.

Thanks for the chat Don and cheers for your business success. Can’t wait to become your silent partner and reap the rewards.

Lots of love Kevvie.

PS must toddle off quick have a few “national emergencies” with advertising and “moral challenges” in elections and stuff to sort out. Toodles

PPS Do you have any friends in other industries that are doing great…..we really are a bit short, send me their names. I promise to respect them in the morning”

There you go Don my son. Totally fair.

Nothing like taking over a part of a profitable business by stealth.

Awesome stuff champion. Go play on the highway with pers….there’s a good boy.

antiperspirant says:

01:18pm | 31/05/10

Yeh like he took it too the meanies producing carbon and Iran in the workld court and helping all those mums out with more care to stop the double drop off…......oh wait.

So happy you want to reward business failure with a hand out. Simply superb.

Seriously who plans to fail.  Do you honestly think that in a deep recession the government will write out cheques for business losses? If they will not what is the point of it? They can’t use it as collateral. They can’t go to bank and say don’t panis 40% comes back regardless. Hence sovereign risk.

Love the last sentence. So what do you suggest. New insulation or overpriced and rorted school canteens, you know those final bastions of education supremacy….the canteen.

You need to get out more.

Florence Howarth says:

12:36pm | 31/05/10

You are wrong.  I am 68 year old and I can remember that the tax during that time was very high.  Can some one out there enlighten me to the rate?  My hazy recollection of something more that 60 or 70 percent cannot be right, but I know it was very high in the 50’s.  No one seemed to care as it was the first time in many years that those farmers had any income after years of drought and wars.

Keith Hammersmith says:

10:50am | 31/05/10

but more strongly oppose than strongly support, with a large number still making up their mind.

Joan says:

02:51pm | 31/05/10

and what did it say about taxpayer support for taxpayer guarantee of 40% mining losses?  Please inform

persephone says:

07:08pm | 31/05/10

And you can’t read simple English.

Repeat after me: the tax raised from the Resources Tax is being spent on specific programs. Without the tax, these programs will not go ahead.

When and if the budget goes back into surplus has nothing to do with the resources tax, as none of the money from it either replaces present government spending or pays off debt.

Thus removing the resources tax makes no difference to the budget bottomline.

Bea Minor says:

04:40pm | 01/06/10

I agree. Rudd faces extremely negative press that does not seek the positives in any policy. Whilst it is the role of the media to play devil’s advocate, there is limited emphasis on the rationale Labor lays claim to for the mining tax . I am not a Labor voter (although I am swinging that way) but In my simplistic view, the government has to date, staved off recession and that was always going to cost.  And unlike previous Labor governments, the Rudd government wishes to return the budget to surplus. It is a rock and a hard place politically - increase costs for “working families” and alienate voters or source the additional revenue from an industry like mining that is sustainable long term.

I realise it is way more complex than that and that “working families” will undoubtedly not be free of the brunt. But it would be good as Evan Findlay said,  to see the media balance the argument with the government’s rationale instead of appearing to side with big business.
Then maybe the need to spend up big marketing policies wouldn’t be as great.

persephone says:

09:00pm | 31/05/10

No.

The Feds are not taxing the rocks - they are not levying royalties - but taxing the companies.

They do this at present, have been doing it for decades and no one has ruled this unconstitutional.

TC says:

09:44pm | 31/05/10

Do you think there will be less mining when te government hops on the mining horse?
Do you think with the incentive for more tax they will be stricter with where mining can take place.
Do you think they’re going to use any of the $9BN to look into better methods of mining?

John A Neve says:

03:02pm | 31/05/10

John,

We elect governments to govern, they don’t have to consult. We don’t live in a true democracy, with live in a Representative Democracy, there is a big difference.  Our governments can send us to war without asking!!!
Come on John, get a grip, this is all part of the Brave New World.

John says:

11:42am | 01/06/10

John. You missed my point, maybe you should take off those pink coloured glasses. No-one is against an increase in tax, miners or govt, its the way the whole thing has been botched by govt.
If there is no public inclusion in decisions you know what happens….whoever it is gets chucked out of govt at the next election….thats the way it is.

Rob r Charteris says:

04:50pm | 02/06/10

John says:11:13am; Last time i looked the oil and gas industry are still going strong. And the great GDP figures out today say the BER was a magic spoon in the mouths of australia, so what are you trying to get. Even the report coming back on the insulation prgram couldn’t fault it. What is it with you Lib types… sour grapes it wasn’t you??? what gives????

Evan Findlay says:

01:05pm | 31/05/10

And just to add to your comments Serious, an article in today’s Australian and a previous article in the Courier Mail, dated the 20th of May, states that other countries that receive royalties from mining are considering quite seriously in following Australia’s lead in receiving a fair price for their resources. If other mining nations follow suit it would most assuredly make redundant the argument that the tax would make us less competitive, even though that argument is blatant misinformation to begin with.

Nigel Catchlove says:

04:48pm | 31/05/10

You’re quite right with the fact that Australia does not add enough value to its mineral resources before exporting them.  However, if you were to encourage the growth of value-adding industries - which would ensure Australia gains the maximum value - the last thing you should do is increase the cost of those minerals.  It’s not rocket science, it’s economics 101. 

If you wanted to increase the barriers to entry for value adding companies (those employing secondary metalurgy for example) then adding a new tax to the primary resource would be a great way of doing it.  If the government really wanted to compound the issue to ensure none of those pesky value added industries pop-up then they would increase the power prices and tax emissions too - but then again, they tried to.

persephone says:

09:11pm | 31/05/10

Nigel

rest assured, the cost of iron ore will remain the same, whether the tax is imposed or not.

As Ken Henry says, you learn in Year 10 Economics that a tax on profit can’t drive up the cost of anything.

What you are saying (if you think this) is that, to make up for the loss of profit due to the tax, companies will try to increase their profits by charging more, and by making more profit will expose themselves to more tax, which means that they have to increase the price to make more profit, which means that they will pay more tax…

A tax on profits simply means you keep less of your profits. It can’t drive up the price of anything (and the price of iron ore etc is set by the world market, not by the sellers).

Nigel Catchlove says:

11:04pm | 31/05/10

Persephone, why set the rate at 40 per cent?  Why not 60% or 80% if the tax will have no effect on investment or commodity prices?

Freeman says:

03:27pm | 31/05/10

Aint it funny how labor voters vote as a family. “my daddy voted labor, his daddy voted labor!”
it says something about the mentality of many labor voters. Labor aint a footy team so don’t follow them like they are! think for yourself! 
Martha, no doubt your family and your friends families would vote Labor even if they bought Goff whitlam back.

Mick In The Hills says:

03:52pm | 31/05/10

Good for you, Martha - that’s what democracy is about.

But the 48% of the population that don’t vote Labor are hoping that just 3% (only 3 out of every hundred voters) are P*ssed off enough with Rudd to not vote for him again.  Then we’ll be rid of him at last.

persephone says:

09:21pm | 31/05/10

Sorry, freeman, but countless political studies show that this applies to both sides of politics - the way your parents voted is the biggest predictor of how you will vote, whether you’re Labor or Liberal.

Marie says:

01:10am | 01/06/10

Creates an unusual situation for a sibling if one parent voted Labor and the other parent voted Liberal, as it did in my parents case. It tought me that all politicians are to be treated with suspicion and are NOT to be trusted, particularly the smiling assassine type politicians.

Freeman says:

09:37am | 01/06/10

Don’t be sorry Perse, it aint your fault. i’m yet to hear a Lib supporter proudly state that they and their family proudly vote liberal and always have (and always will) Labor on the other hand has a following from families who blindly vote labor at every election, even though labor is a very different party than it was in decades past. some families vote that way coz it’s drilled into them by their union and other welfare orientated families always vote labor for the belief that welfare is a entitlement, a god given right, and that Labor is the best party to deliver it to them.

John A Neve says:

03:58pm | 31/05/10

A the M,

Talks a lot of s**t, “your bills and private health insurance” have little or anything to do with the federal government. Sadly, based on A the M’s post neither does education!!

The impact on your or any one elses super will be negligible as a result of this proposed tax.

Perhaps A the M could tell us why they have made this claim?

Collin R says:

06:38pm | 31/05/10

Against the Man is right and you know it

Against the Man says:

07:20pm | 31/05/10

Ha Ha John. Seems I’ve hit a nerve. But thou protest a lil’ too much which makes me think that you are running out of energy to keep convincing yourself rudd is alright. Relax and embrace the time for change philosophy mate!

persephone says:

09:27pm | 31/05/10

Well, no, Against the Man is wrong..

The super funds themselves say the tax will benefit the industry. This is because the government is using some of the money raised to help people top up their super.

Also, no reputable super fund either invests short term (and all long term predictions are that this tax will benefit mining) or puts all of its eggs in one basket (if your super fund is only investing in mining, or only investing in buildings or only investing in MIS schemes, get out now). They spread their investments across a range of commodities, so that if one performs badly others compensate for this.

Evan Findlay says:

05:46pm | 31/05/10

Saskia, if the ALP has “zero” hope of winning the next election with Kevin Rudd at the helm, it certainly does not bode well for Mr Abbott who sits sixteen points behind as preferred Prime Minister.

Rob r Charteris says:

06:41pm | 31/05/10

Evan Findlay says:05:46pm; Yeah if Abbott was doing such a great job you’d think he would have made inroads. In the opinion polls out today he has moved from when he first became leader of the opposition. I think it is fantastic he is leader of the opposition. Actually his disapproval rate has climbed to 50%