Eloquent indeed JohnC your observations are spot on.
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Eloquent indeed JohnC your observations are spot on.
I agree with the logic, but not with the interpretation of retrospective. As I understand it, based on what Cultana said because I have not looked into it, and based on your description, the tax affects future income, not past means of production. Think about a change in the rate your personal income is taxed at: you might want to change the way you invest your money in the future, but you would not call it restrospective because it changes the profitability of your current investments.
Found this article relevant and interesting
Shallow discourse
:goodpost:JohnC.
Just another little bit, perhaps not a big issue, but the miners are allowed to tap their water requirements at no cost. Others have to pay a licence fee.
When a company looks at developing a mine it takes into account the development and exploration/proving costs of getting to the point of production. It calculates the amount of resource available estimated margins and the amount of production required to break even. Part of that analysis will include royalty and income taxes and their impact on cash flow. By greatly increasing the amount of tax to be paid on existing mines you extend out the time taken to recover cost and produce an acceptable rate of return. In some cases this will mean if companies had known what the tax was going to increase to the mine may well of been deemed uneconomic and never commenced. There may be some mines now that will not have sufficient recoverable reserves to make a profit. Don't forget current mineral prices will not stay at these levels, they will at some point turn down that is the nature of commodities.Quote:
Originally Posted by Frank&Earnest
This is retrospective taxation, because of the nature of mining and the fact that mines only have so much ore, its not like manufacturing where decisions are made on the life of machines and market factors including cost of materials. Mining is based on the life of the mine plus rehabilitation costs at the end, life of machinery and market instead of primary are almost secondary in the decision. This was acknowledged in Frasers time, but it is something that is being conveniently overlooked with this tax.
An interesting read Fred and it goes part way to explaining some of my reluctance to go in to bat for the miners.
I remember John Elliot lobbing a similar threat some years ago. He said he was willing to take operations off shore where he would get a better deal. Should have locked him up and thrown the key away.
We should not bow to such pressure from any group!
It was interesting to hear what Clive Palmer had to say on a promo for Four Corners about this whole episode not being democratic. I must make sure to watch Four Corners.
I think one of the problems we have with governments of both persuasions in this country is the number of "gotchas' they land on us. While some things have to be done on the run - or as circumstances dictate - Major decisions like this are likely to lead to the sort of angst we are seeing now if the processes are not thought through properly and we have no prior warning of them.
This sort of decision making is unsound, unhelpful, divisive and even carries an element of danger.
Let's see some more intelligent articles and some better informed and reasoned debate than we are getting from most sources at the moment.
OK different tack the government needs $9bill PA to balance the books.
Commentators and academics alike are hand wringing about the need for government to be able to implement policy without influence/interference (I thought that was freedom of speech oh well)
So why did the gov ignore the Henry recommendations on negative gearing and capital gains tax. If both NG and CGT concessions were abolished the $9bill would be more than covered and I think the pain would be evenly spread across middle and upper income earners in Australia. Maybe your average working family with an investment property Mr Rudd drones on about would be none to pleased. Rather touch up those miners and their overseas investors after all the working families are bound to support higher super in the run up to the election and what working family would argue against getting a bigger share of the resource wealth.
The proposition that parties with self interest should not be allowed to voice their displeasure and influence government policy is bunk especially in the light of the monotonous populist policy both sides are dishing up lately.
Our democratic process certainly does dampen reform, look how long it took to get the GST up. I happen to think that is a good thing as it protects us from lunatic policy.
And how is this different from changing the amortisation rate allowed for an asset?Quote:
Originally Posted by johnc
It has nothing to do with it, amortisation is simply the rate you write your establishment and asset costs over time for book and tax purposes. It has nothing to do with return on investment which is a cash based calculation as opposed to a mere book entry. When assessing viability you eliminate amortisation from any calculations.Quote:
Originally Posted by Frank&Earnest
You also miss the point on a turn down in commodity prices. If they turn down enough we may well end up subsidising the mining industry out of our hard gouged tax dollars, something that doesn't appeal to me. Don't forget the Government is porposing cash rebates for certain mining expenditure.
Which should then be considered a reduction of risk to be valued positively in assessing viability. That's their purpose.Quote:
Originally Posted by johnc
My sentiments entirely. And then our vote does not count. Frustrating, isn't it?Quote:
Originally Posted by artme
I think our votes count for a lot. Apart from our comments and dialogues it is the only voice we have in our "duocracy". The point is to be able to use our vote to send the messages we want to send. That the buggers dont listen is of course another point.Quote:
Originally Posted by Frank&Earnest
Thanks for the links, seems like Im not the only one who thinks like this. I really take Shaun's point that the future of our democracy is at risk from this simplistic populism. hmmm
Don't profits only come about when the mine has paid for itself? Isn't all revenue up to that point spent on expenses until the balance sheet balances?Quote:
Originally Posted by johnc
Having said that I think to cherry pick a major taxation reform document is woeful management. I'm a labor voter and although I liked getting the stimulus cash, I haven't been impressed but K Rudd at all.
Seems henry had the backing of everyoneQuote:
Originally Posted by The Age
That is scaryQuote:
Originally Posted by Big Shed
Exactly!!Quote:
Originally Posted by Gingermick
We have focussed too much on the mining tax at the expense of the big picture and perhaps our concern- anger for some - should turned in that direction.
But is this not typical of the present gov. approach to policy?? Throw mud - er , money - and hope some sticks.
I'd agree with Mick and Artme the problem really is the cherry picking not the make up of this particular tax. Even then what was picked is not the same as the recommendation in some aspects. It is not acceptable that after sitting on the Henry review since December that this is all we get. It should also be noted that the tax was sold not on its merits but what it could be spent on. It has all the hallmarks of lack of thought wrapped up in a sugar coating and we do deserve better than this. It would have been far better to release the document and get some debate and consultation going before announcing what could have been a more comprehensive response.
In answer to Mick, you could say that a mine doesn't really turn a profit to its owner until it covers it costs of development which agrees with your comment. On the other hand if you expect that the mine might have a 20 year life then you may spread that cost over the twenty year period and in each year possibly make an operating profit that repays its development costs over the entire period, you would be taxed on that operating cost. In a simplified answer the company is taxed on the latter approach, paying royalties up front and company tax on the basis or operating profit less allowances.
It is all a moot point, and up to the miners to work out, however I would expect that as most of our majors have overseas interests nothing will change in the short term. They will continue to mine in the countries that give them the best rate of return, we have to be prepared to accept that may not be here in every case. However is that a bad thing, we may well be exploiting our mineral reserves at too fast a rate considering we are doing very little to boost our terms of trade in any other sector.
Definite signs of softening attitude here
Swan accepts miners' concerns are legitimate - ABC News (Australian Broadcasting Corporation)
Could have something to with today's Newspoll?:rolleyes:
It is possible I haven't made myself clear. First some housekeeping:Quote:
Originally Posted by Vernonv
, I appreciate your concern but while this thread is "vigorous" I think everyone is showing appropriate respect for one another's views.
When you read my posts remember I have an overactive sense of humour balancing my passionate cynicism and dislike for government. It _might_ be a joke and it would pay to ask before you flail me :) (not that anyone has ...yet..)
Johnc: Some very good posts, well done.
Now to labor.
I accept completely that the coalition are a lousy bunch. As I mentioned previously I have no doubt they are corrupt and incompetant, and I am sure I could make a strong case for same. I protested against Howard's gun laws and railed against many other things they did (tiered hex anyone?).
I am scarred by Labor. First in the early 80's when I was younger and poorer and I saw what Hawke did to "working class" people with his economic rationalism. No percieved national benifit could offset the damage he did to the lives of some of societies most vulnerable people. I was out of work for some time during the "recession we had to have". I was plenty hard up, but there were many people around me who suffered worse. Here in Queensland I watched as Beatie systematically destroyed this state. He stripped money out of both the taxpayer and the state government and syphoned it into the pockets of his labor mates at astronomical rates. In 12 years we have gone from being the lowest taxed state in Australia to the highest. Despite a mining boom we are supposedly broke and our infrastructure is shot.
I truely hate both sides of politics, but reluctantly over time I have come to the conclusion that the coalition inflicts a bareable level of pain while labor just slits you open and keeps on cutting until your drive them back into their holes. I accept I am anti labor, please don't imagine I'm pro coalition :)
Back on topic.
As has been said miners cost projects on a whole of life basis and those lives are decades not years. The capital upfront is enormous. If the government changes the rules mid stream they won't shut existing mines but if mine A is now less profitable it impacts on developing mine B. Jobs will be lost, I garantee it.
We all benifit far more than we suffer from our market economy. You can argue the balance for that market being global, but that is the reality we face. If a miner can spend X and get more return in Canada than here we lose. End of story.
Henry being technically right or wrong is irrelevant. It is part of his job to properly answer questions from government hearings. He didn't, and showed himself an arrogant and egotistical individual worthy of the parliment.
Mining companies don't vote, people do. You guess why new taxes are aimed at companies not individuals. It's a balancing act though because as I said previously many companies are not tied here and can simply move overseas if it gets too expensive. James Hardy anyone ? It's a cheap shot to attack the "big bad multinational". I've said previously I believe the company is the single most evil creation of man, but this harms people it does not defend them against the evil these institutions do.
Am I against changing the way mining companies are taxed ? No. I am against blundering into tax changes without thinking them through properly.
Anyway, interesting reading everyone's comments.
One thing I don't think has been touched on yet, and I haven't heard it in the public arena except Ch 2, and that is that this won't just effect the big end of mining (as Dudd has been only to willing to point out) but the little fellas too.
If it comes out of the ground it will be hit by the Mining Super Tax. And that will include quarries, lime etc., so we aren't just talking about big business but SME too.
And when that gets out, which it may well do tonight on 4 Corners, then I think there will be a bigger public swing against the whole thing.
(edit to phrase for Fred :U )
Could I, once again, remind people that the subject of this thread is Mining Super Tax?
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.
I have no qualms about the behavior in the discussion but as I said it was starting to digress.Quote:
Originally Posted by damian
: di·gress
Pronunciation: \dī-ˈgres, də-\Function: intransitive verb
Etymology: Latin digressus, past participle of digredi, from dis- + gradi to step — more at grade
Date: 1529
: to turn aside especially from the main subject of attention or course of argument
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....
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.
:aro-u: :2tsup:
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.
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. 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.
Why should any business who is deemed to make x amount of profit pay more tax for being successful? :?Quote:
Originally Posted by HappyHammer
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.Quote:
Originally Posted by Sebastiaan56
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:
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)Quote:
Originally Posted by Waldo
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.Quote:
And indeed why should any person who is successful pay a higher amount of tax on the super earning he/she makes?
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%.
So do you also support the abolition of the tiered personal tax system?Quote:
Originally Posted by hughie
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.
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.
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.
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:
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...
did someone mention Eureka Stokade?
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.Quote:
This is an issue many don't realise, as a mine winds down as the output reduces the tax returned will become smaller. ....
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 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.Quote:
Originally Posted by .RC.
If we did this maybe we wouldn't need a Mining Super Tax.
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.Quote:
Originally Posted by HappyHammer
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.