Mining Super Tax

[johnc]

One Steel, which is a steel producer spun off from BHP a few years back has sent its view to shareholders. It believes it will be hit hard with few offsets, which could make it less able to compete with imports. If that view is correct it could cause price increases or loss of jobs, but the implication is we need to more closely look at flow on effects of the tax.
Four corners will be of interest tonight, although you have to wonder if there is much more to add over what has already been written at this stage.

[RETIRED]

It is possible I haven't made myself clear. First some housekeeping:

, I appreciate your concern but while this thread is "vigorous" I think everyone is showing appropriate respect for one another's views.


I have no qualms about the behavior in the discussion but as I said it was starting to digress.

: di·gress
Pronunciation: \dī-ˈgres, də-\Function: intransitive verb
Etymology: Latin digressus, past participle of digredi, from dis- + gradi to step — more at grade (http://www.merriam-webster.com/dictionary/grade)
Date: 1529
: to turn aside especially from the main subject of attention or course of argument

[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....

[smeds]

This is one of the most rediculous ideas i have ever heard of, lets just tax the guts out of a business until you have ground it into the dirt. If any of you have shares in these mining companies or any company for that matter, you will note that if your shares are fully franked, the Government has already taken tax at 30%, so how much more do they want.

Secondly, if they insist on doing something like a new tax, don't just target the mining industry, how about hitting the top end of town, or are they too scared. Hit the banks, have a look at the profits they make as opposed to mining companies, their directors seem to get paid multi million dollar salaries and they still turn over a huge profit.

So if they insist on a tax, then spread it around and make it even. Put a cap on the tax so a company doesn't fall into their new bracket until they reach a certain profit margin. You just can't keep taxing companies and people for that matter to top up the Government money bucket, just because they can't balance their books or make proper decisions. If they run their own personal bank books like this, then i am surprised their not living on the street, because i am damn sure they wouldn't be able to pay their own mortgage.

[Waldo]

:aro-u: :2tsup:

[HappyHammer]

It's only the mining companies that make super profits over a certain level that will incur the tax increase. A bunch of mining executives bleeting about how unfair it is to their hip pocket makes me feel sick, they'll survive and survive quite easily.

I'm not a Kev supporter but I think if he wants to retain any credibility he needs to stick to his guns and deliver the benefits this tax has been earmarked for.

He should replicate the tax for the banks as well !

HH.

[m2c1Iw]

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 (http://www.futuretax.gov.au/pages/default.aspx). 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.

[Waldo]

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? :?

[olfella]

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?:doh:

[Gingermick]

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)

[hughie]

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%.

[Vernonv]

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.

[Waldo]

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.

[cultana]

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.

[olfella]

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' :doh:

[.RC.]

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...

[Gingermick]

did someone mention Eureka Stokade?

[HappyHammer]

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.

[HappyHammer]

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.

[Waldo]

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.

[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.

:yes: 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]

:aro-u: Very well written. :2tsup:

[.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!!:2tsup:

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. :rolleyes: :D

[kiwigeo]

Er yeah right....sarcasm..yeah ok. :doh:

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

[cultana]

Martin, I know exactly how much I get from my self funded retirement, $25,000 with no yearly indexation for CPI.


As for the fat cat remark, take a good long look and you will notice that retirees are on the bottom of the pile and that some/a political party has even hinted that self funded retirees are fat cats. They ignore most are just scratching through.

Yes you bet sarcasm.. and sickened t death by watching politicians missmanage this nation, getting huge super pay outs and not even being able to introduce tax reform with out causing huge pain and botching the process.

[kiwigeo]

I didnt read your post properly.....Looks like I need to retire sooner than I planned :C

[m2c1Iw]

I didnt read your post properly.....Looks like I need to retire sooner than I planned :C

Highly recommend you talk to your friendly and helpful financial planner first. I hear K Rudd and Assoc. are very good. :D:D

Sorry :- and no disrespect to the recent retirees man have they been pummeled over the last 18 months.

[johnc]

Highly recommend you talk to your friendly and helpful financial planner first. I hear K Rudd and Assoc. are very good. :D:D

Sorry :- and no disrespect to the recent retirees man have they been pummeled over the last 18 months.

Probably no worse than half the planners out there.

[HappyHammer]

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.
Hi John, Exactly when does the super profits tax cut in?

Here are some extracts from the governments Future Tax website.

Current State Royalty Scheme


For the resources sector as a whole, royalties can ‘underprice’ the extraction of non‐renewable resources — which are owned by the community. As royalties are relatively unresponsive to changes in resource profits, the community has largely missed out on sharing in the vast wealth generated from the sale of Australia’s non‐renewable resources.

Royalties tax high profit projects proportionately less and low profit projects proportionally more, thus distorting the pattern of investment. This may mean some of the more risky deposits, or those that are more costly to develop, are not pursued. It may also lead to the early closure of resource projects. This affects how much of Australia’s resources are utilised, and the return available to be collected through resource charges. This can lower the return to the community collected through its resource charges.
The Super Profit Tax


Under the current system, royalties are paid on the extraction/sale of resources — irrespective of the profitability of a project. Under the RSPT, firms will receive a refundable credit to offset royalties paid. A project will not incur a tax liability under the RSPT until it becomes profitable after recovering its costs. By extension, no project that was profitable under the royalty system will become unprofitable because of the RSPT. Rather, some projects that would eventually become unviable under the royalty system may now remain viable for longer because the RSPT is a profit‐based system that recognises costs associated with the project in deriving profits. The crediting of State royalties is discussed in the accompanying fact sheet.

Why would they lie?

HH.

[HappyHammer]

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)
Is that the place where XStrata are continuing to buy up land?

HH.

[Waldo]

Yes, they are. Of course they have contingencies in place. The obvious one is Dudd being booted out and Australia coming back to its senses.

Money might appeal to Joe Public, but look at the bigger world picture. Something Dudd can't see to.

[HappyHammer]

This is the kind of behaviour that makes the miners look like scaremongers where they use examples like this one as a canned project when in fact they are continuing to invest in it.

What is the bigger global impact of ensuring Australians get a long term benefit from a non-renewable resource? This isn't an attack by the way just asking the question.:U

HH.

[Waldo]

Scaremongering from a man who is proud he will pay something like (can't recall right now) $1.5 billion this financial year in tax and is proud to - I don't think so.

He gave the most rational debate for this whole thing so far, which is so far removed from the spin that Dudd has done. Pure spin, but with no substance of detail. And for Dudd to resort to name calling of those who put back into our economy - it might be accepted in Parliment, but on a world stage?

Xstrata 'weighing up its future in Mount Isa' - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/stories/2010/06/15/2927231.htm?site=news)

Labor MP wants end to tax impasse - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/stories/2010/06/15/2927235.htm?site=news)

So now some Labor MPs are seeing sense and the damage being done.

[HappyHammer]

I don't begrudge him any of the money he has earned but why shouldn't he pay that much tax when he is earning billions? He's no hero just because he pays his taxes just like the rest of us.

I'd suggest reading between the lines of XStrata in Mount Isa that either the project was already considered a dubious prospect or it's just temporarily on hold to try and impact this debate.

As for the pollie he's obviously only interested in saving his own neck and not in whether the tax should go ahead or not which he fails to give an opinion on.

HH.

[Waldo]

Why should he pay more tax, just because of his success?

Consider that his success puts people in jobs, and that among many other things feeds into the economy. :?

[Vernonv]

Why should he pay more tax, just because of his success?That's what every person on a high income has to do ... so why not companies?

[Waldo]

I've got better things to do than continue an argument, nothing personal but I don't need to increase my blood pressure.

Thankfully we all have opinions, if we didn't it would be boring. :2tsup:

[HappyHammer]

Why should he pay more tax, just because of his success?

Consider that his success puts people in jobs, and that among many other things feeds into the economy. :?
He's not paying more tax the company is. And anyway we all pay more tax the more "successful" we are based on the tiered income tax system.

This tax is about applying the tax to the profits rather than the indiscriminate nature of the current royalties system.

HH.

[HappyHammer]

Thankfully we all have opinions, if we didn't it would be boring. :2tsup:
Very true. :2tsup::U

HH.

[cultana]

This makes interesting reading:

Nothing fair about this tax | The Australian (http://www.theaustralian.com.au/news/opinion/nothing-fair-about-this-tax/story-e6frg6zo-1225879621482)

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.

[HappyHammer]

Yes very interesting....

The author writes...

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.

But in fact...from gov website..

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.

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


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.

HH.

[johnc]

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.

[HappyHammer]

I think the analysts should read the information that is available on the governments website here (http://www.futuretax.gov.au/). 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.



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>.


HH.

[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?

[HappyHammer]

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

HH.

[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 (http://www.abc.net.au/unleashed/stories/s2928109.htm)

[Waldo]

On Lateline last night, which Anthony Anthony Albanese when questioned would not reply to Tax threatens shareholder dividends: Wesfarmers - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/stories/2010/06/15/2927683.htm)

[damian]

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.

[johnc]

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?

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.

[rrobor]

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 (http://www.abc.net.au/unleashed/stories/s2928109.htm)
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?

[johnc]

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.

[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. 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.

[Vernonv]

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.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.

[HappyHammer]

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

HH.

[RETIRED]

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

HH.Perzactly.

[m2c1Iw]

I think this (http://www.news.com.au/business/the-duffers-guide-to-rudds-mining-tax/story-e6frfm1i-1225880647733) article sums up the state of play. If you read some of the comments even the Duffers guide to the Resource Super Profits Tax does little to explain to duffers like me.

I also note that the treatment of interest differs from standard accounting practice if what is written is to be believed.

What has become clear to me is the fact that one should treat any communication on the subject with the utmost caution as it appears nobody including our leaders are able to fully explain how this tax is calculated or the true impact it will have.
Did you see a couple of backbenchers on the news last night. It was down right embarrassing, they did not have a clue.

[HappyHammer]

A refreshing view here (http://www.smh.com.au/business/world-business/billionaires-dig-in-to-kill-good-economic-idea-20100617-yh31.html#poll) in the SMH from a Reuters reporter. Interesting that 60% of over 10,000 people who voted on the poll are in favour of the tax.

HH.

[HappyHammer]

I think this (http://www.news.com.au/business/the-duffers-guide-to-rudds-mining-tax/story-e6frfm1i-1225880647733) article sums up the state of play.
Makes the tax sound fair to me, the risk of a project not making a large profit is offset by a lower tax rate than they have now and if it is very successful they pay more to enable an increase in Super contributions and improvements in infrastructure.

HH.

[kiwigeo]

I hear Rudd is considering varying tax rates for different commodities/mining projects. Great idea Kev.....so now we have a poorly thought out simplistic tax regime that's fast morphing into a complicated cumbersome and no doubt costly tax regime. The only beneficiaries will be the extra public servants required to run the whole thing.

[Big Shed]

I hear Rudd is considering varying tax rates for different commodities/mining projects. Great idea Kev.....so now we have a poorly thought out simplistic tax regime that's fast morphing into a complicated cumbersome and no doubt costly tax regime. The only beneficiaries will be the extra public servants required to run the whole thing.

Would give a whole new meaning to "creative accounting". Company X mines 6 different commodities, so all the profit is made on the lowest taxed commodity?

Talk about "policy" on the run:doh:

[damian]

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

No worries :D

I think this has all been said, but not in one place and I think it's worth repeating for focus. To my mind the issues are:

General company tax as per all business. I think we agree on this ?

Additional tax to compensate for the extraction of a finite and nation owned resource (you might argue farmers exploit the same resource but that's another kettle).

The efficiency with which the tax is levied and collected. Perhaps the "fairness" also ? Differentiating between minerals for example.

Whether the mining companies or the government are better able to put $ to work in the interests of Autralia and Australians. Mining company community development and shareholder supannuation vs government spending. Not clear cut IMO.

Have I missed anything ?

[cultana]

I hear Rudd is considering varying tax rates for different commodities/mining projects. Great idea Kev.....so now we have a poorly thought out simplistic tax regime that's fast morphing into a complicated cumbersome and no doubt costly tax regime. The only beneficiaries will be the extra public servants required to run the whole thing.

I read this and then there was piece saying he was not going to alter his initial 40%.
So it seems that this tax moves about testing the water so to speak to see if it will get voter traction.

I am beginning to consider that it would be highly beneficial if the current tax was scrapped and the industry and government went of into the back room and started from scratch. Then came out with an agreement with out all this instability the current situation is causing.

[hughie]

I am beginning to consider that it would be highly beneficial if the current tax was scrapped and the industry and government went of into the back room and started from scratch. Then came out with an agreement with out all this instability the current situation is causing.



Nah, thats not likely to happen, pride wont let that happen and I believe he's got the nod from the power brokers. No more back pedaling on policy, so he has painted himself into a corner. Kevin in 07 gone in 11 :U

[cultana]

Nah, thats not likely to happen, pride wont let that happen and I believe he's got the nod from the power brokers. No more back pedaling on policy, so he has painted himself into a corner. Kevin in 07 gone in 11 :U

Try this little news paper heading.
Poll the key as mutineers circle Kevin Rudd | The Australian (http://www.theaustralian.com.au/politics/poll-the-key-as-mutineers-circle-kevin-rudd/story-e6frgczf-1225881585681)

[hughie]

.

Poll the key as mutineers circle Kevin Rudd | The Australian (http://www.theaustralian.com.au/politics/poll-the-key-as-mutineers-circle-kevin-rudd/story-e6frgczf-1225881585681)

Bad news for some. But good news for others :U yay! :2tsup:

[.RC.]

I think the ultimate goal of the federal government is to force the states to do away with royalty payments altogether...

Every year the federal government is making the states more and more obsolete as they turn them into their serfs by withholding monies until the states do the federal government's bidding..

This is not helped out by voters voting in crap state governments... Before you all jump up and down and say the states should be abolished consider this.... Federal government laws are much stricter then most state laws.... Ever tried to import a knife into the country?? What is legal to own and make in the states can be illegal to import into the country..

When was the last time you went to a federal government building for assistance other then for welfare payments?

I do not think I have ever been to a federal department building even centrelink.. I have been to plenty of state department buildings..

I firmly believe the government does have an agenda to make state government as obsolete as possible which is not the way our constitution is set up... Power is supposed to flow from the states to the federal government, after all we are a federation of states.. Federal government is supposed to be the smallest sector of government..

[kiwigeo]

I firmly believe the government does have an agenda to make state government as obsolete as possible which is not the way our constitution is set up... Power is supposed to flow from the states to the federal government, after all we are a federation of states.. Federal government is supposed to be the smallest sector of government..

There are arguments for an against state governments. Here are some examples of the negative side of State Governments:

1. My wife is a registered nurse working in South Australia. One of her jobs is working as an office based coordinator for a home nursing company that has operations in SA and Queensland. She is required to have registration as a nurse in both states. Why can't there be a single national nursing registration body so nurses can work in any state without having to take out new registration?

2. Until relatively recently it wasn't possible to run trains between states without having to deal with different track guages. The reason for the different guages.......it depended purely on the nationality of the Engineer in charge of railways in each state at the time railways were established. The only reason New Zealand doesn't have multiple guages is because shortly after the first (broad guage) lines were built they did away with the provincial governments and the national government adopted narrow guage as the standard.

3. Payrol tax is levied by state governments and varies by state. It's a tax on employment and a straight out money grab.

[HappyHammer]

I firmly believe the government does have an agenda to make state government as obsolete as possible which is not the way our constitution is set up... Power is supposed to flow from the states to the federal government, after all we are a federation of states.. Federal government is supposed to be the smallest sector of government..
IMO this is an outdated and costly structure and inhibits progress and efficiency on many levels some of which have been pointed out. The sooner we have a single government and abolish the state governments the better.

HH.

[hughie]

this is an outdated and costly structure and inhibits progress and efficiency on many levels some of which have been pointed out. The sooner we have a single government and abolish the state governments the better.


It makes sense both financially and logically. But and its a major but, do we trust the federal government with this sort of power increase?
Given various track records of the labour govt for instance... Whitlam and now Rudd I am not sure I want to go that way just yet.

[cultana]

Yes you can make a big list about the differences between each state. Just start with rule of the road.
Qualification matters such as nursing is a significant one but so is teaching in schools. Many states do have cross border agreements of qualification recognition.

the reality is even if you want to get rid of the states you will still end up witha central government and lost of regional boards. Reality is these regional boards will be not much different to the 'wow' local councils we already have.

Face it you get the federal and state government you vote in. You also get the political numnuts in your electorate you vote for in our so called democratic system. perhaps if the standard of politician and the level of political intelligence in each party was a big higher, (lots higher) the matter may not arise for discussion.

the SPRT is just a case of the federal government trying to make states irrelevant but perhaps it is a case that taxes should be limited to states and few actually passed to the federal government.
federal government over the years have taken over the funding of universities, TAFE and now moving into secondary and primary schools. Sorry but with all this I have not seen any real improvement in any of these areas since the federal government moved in.

ANyway this thread was about the mining tax I think.

[m2c1Iw]

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.


I agree.

I have had the misfortune to view the latest Liberal advertisement and must say I am extremely disheartened by it. It highlights either an inability to debate the issues or total lack of suitable alternative policies or both.

While I am conservative my current view is the Libs do not deserve government and whoever authorised this latest ad....... well someone should tell them it is very likely to have the reverse of it's intent.:((

Politics in Oz has sunk to a new low.

[HappyHammer]

It makes sense both financially and logically. But and its a major but, do we trust the federal government with this sort of power increase?
Given various track records of the labour govt for instance... Whitlam and now Rudd I am not sure I want to go that way just yet.

At least we'll only have one place to go to ask questions about progress or otherwise and it will remove the finger pointing and need for inter state agreements on anything saving us the time and money it costs to set them up and maintain them.


I have had the misfortune to view the latest Liberal advertisement and must say I am extremely disheartened by it. It highlights either an inability to debate the issues or total lack of suitable alternative policies or both.

I agree this is an insult to voters, it suggests voters are of low intelligence and their vote will be swayed by infantile advertising.

HH.

[Waldo]

I have had the misfortune to view the latest Liberal advertisement and must say I am extremely disheartened by it.

And what do you expect Labor will be also doing? They never throw mud do they?

[HappyHammer]

And what do you expect Labor will be also doing? They never throw mud do they?

You're right Waldo they are as bad as each other, but this latest one probably crosses the line.

Did anyone see QandA last night on the ABC? Malcolm Turnbull made some interesting points, I think Tony Abbot will be concerned that Malcolm is back in politics.

Also the greens representative on the panel was reemed by both sides for helping the Liberals vote down the ETS.

HH.

[Waldo]

Yes I watched Q&A. Turnball surprised me as did Richo, the policy advisor had some great points which the Labor bloke wouldn't respond to. While I agree with your point concerning the Greens woman I think she showed herself to be an absolute nutter, as was evident in some of the viewer comments via Twitter.

Your post and my subsequent reply is as a bit of de ja' vue to me. :?

[HappyHammer]

Your post and my subsequent reply is as a bit of de ja' vue to me. :?

From recent experience or from the distant past when we used to exchange views on the forum?:;

HH.

[Waldo]

Something like that. :2tsup:

[Big Shed]

At the risk of addressing the topic of this thread, I find one thing in this whole debate (the Mining Super Profits Tax that is) particularly concerning and that is the behaviour of one of the nation's most senior public servants and architect of this tax, Ken Henry.

I was always under the impression that public servants at that level were supposed to be non-political in their public utterances, Ken Henry is sounding more like a (labor) politician every day

Back the tax, Henry tells economists | RSPT (http://www.theage.com.au/business/back-the-tax-henry-tells-economists-20100621-ysek.html)

[HappyHammer]

Looks like Julia's gonna buckle and give in to the mine owners.:~

HH.

[Waldo]

:brava: Sanity prevails.

Any link to a news report of it somewhere?

[artme]

Or is Henry just backing his baby?

The pity still is that one item has been cherry picked, and that doesn't amount to reform. It is just another example of gutless fiddling around the edges.

As for the Ginger ninja, I suspect she is taking a softer approach ( for the moment? ) to shore up Labor's chances at the next election.

It is interesting to note that negotiations between the miners and the gov. were well under way when the coup was launched. Makes you wonder.

[.RC.]

I just found out this super profits tax will apply to any business that digs stuff out of the ground, not just minerals but gravel pits, limestone(cement) etc.

This will push up the price of everything, things like council rates will have to go up as road materials increase in price.. In fact any construction will now increase in price...

http://www.abc.net.au/news/stories/2010/07/01/2942561.htm

"Some lower value resources, especially sand and gravel, have been arguing they should be excluded from the deal, but it is not clear if any compromise would grant their wish."

[Gingermick]

This will push up the price of everything, things like council rates will have to go up as road materials increase in price.. In fact any construction will now increase in price...

Now I would have thought that increasing the cost of materials would decrease sales (thus profits) so the tax wouldn't apply. Or they can drop the price of materials and (again thus profits) and the tax wont apply.
We seem to be forgetting that this is a tax on profits only above a certain threshold.

[damian]

Inside business (sunday abc TV) used just such a business as it's example a few weeks back. A small family owned quarry in victoria that barely makes a profit. They said they'd basically shut down, sack their handfull of workers and sell or farm the land. I think the podcast is available at the abc site.

Go labor.

[Big Shed]

Sounds like she has caved in to the mining industry

[/URL]
[URL]http://www.theage.com.au/business/gillard-cuts-mining-tax-deal-20100702-zr62.html (http://www.theage.com.au/business/gillard-bows-to-mining-giants-on-tax-20100701-zqlf.html?autostart=1)


Short of having the tax dumped altogether I don't think the mining industry could have had a more emphatic victory.

Now watch the spin that this was a "victory" for Ms Gillard where in fact it is a humiliating back down by her.

[.RC.]

Gillard seals mining tax deal - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/stories/2010/07/02/2942840.htm)

"he changes, announced by Prime Minister Julia Gillard this morning, include reducing the headline rate of the tax from 40 per cent to 30 per cent.

Tax renamed the Minerals Resources Rent Tax
Will only apply to iron ore and coal
Iron ore and coal will now be subject to a new tax at a rate of 30pc instead of the original 40pc
Tax will kick in at the government bond rate plus 7 per cent, which would be around 12 per cent
Oil and coal seam gas to be rolled into the existing Petroleum Resources Rent Tax and taxed at 40pc
Changes mean the Government loses $1.5 billion of expected revenue"



I still believe this tax is wrong, you cannot single out one industry and tax it on the profits it makes, when there are plenty of other industries who contribute nothing to the economy who also make huge profits...

[artme]

Sounds like she has caved in to the mining industry


Gillard cuts mining tax deal | RSPT | MRRT (http://www.theage.com.au/business/gillard-cuts-mining-tax-deal-20100702-zr62.html)


Short of having the tax dumped altogether I don't think the mining industry could have had a more emphatic victory.

Now watch the spin that this was a "victory" for Ms Gillard where in fact it is a humiliating back down by her.

Yes Fred, a victory for nobody.

The Opposition will claim a victory because they will see Ms. Gillard as weak, the mining industry will claim a victory for "common sense"., the gov will claim a victory because the tax is still there -albeit diminished.

The frightening part is that we have had a magnificent display of the stupidity of govermnents and the power of big business.

What will be the next groupto line up and force the government to bend to their will?

[m2c1Iw]

Gillard seals mining tax deal - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/stories/2010/07/02/2942840.htm)

"he changes, announced by Prime Minister Julia Gillard this morning, include reducing the headline rate of the tax from 40 per cent to 30 per cent.

Tax renamed the Minerals Resources Rent Tax
Will only apply to iron ore and coal
Iron ore and coal will now be subject to a new tax at a rate of 30pc instead of the original 40pc
Tax will kick in at the government bond rate plus 7 per cent, which would be around 12 per cent
Oil and coal seam gas to be rolled into the existing Petroleum Resources Rent Tax and taxed at 40pc
Changes mean the Government loses $1.5 billion of expected revenue"



I still believe this tax is wrong, you cannot single out one industry and tax it on the profits it makes, when there are plenty of other industries who contribute nothing to the economy who also make huge profits...

They just can't help using spin. This is not a resource rent tax in any shape or form how can it be when it is on profit!!!!!!:doh:

I wonder if the trigger point now takes into account interest costs on borrowings.

I think the result is a reasonable compromise at least they have ditched the loss component as well. Still don't agree with the principle of selective taxation but nothing new in that.

Hope Gillard gives the Henry reform paper some proper consideration now and get serious about fixing the distortions in our economy. Things like negative gearing should go and replace it with a tax deduction over ten years for first home buyers.

Vote m2c1Iw for PM.......what am I saying:o

[Big Shed]

Yes Fred, a victory for nobody.

The Opposition will claim a victory because they will see Ms. Gillard as weak, the mining industry will claim a victory for "common sense"., the gov will claim a victory because the tax is still there -albeit diminished.

The frightening part is that we have had a magnificent display of the stupidity of govermnents and the power of big business.

What will be the next groupto line up and force the government to bend to their will?

In all fairness to both Gillard and the mining industry, this is probably how it should have been structured in the first place.

Seeing she was part of the "gang of four" that dumped this on the country with little thought and/or planning, if she wants to take the "credit" for this tax she should also accept responsibility for the first botched attempt. But why do that if you have a ready made scape goat in Rudd?

As for "caving in", perhaps if they had consulted with industry before they jumped in with feet first they wouldn't have had to "cave in". Setting a threshold for a "Super Profits" tax at the govt bond rate was never going to fly, you may as well invest your money in govt bonds.