Thread: 40% Tax

Also, have heard rumors that they are thinking about re-introducing death duties after the next election ?

'racist' mining tax
Comments like this show how incapable are the politician in Australia (in both parties)

It is sad that this imbecil is treating as with comtent

The comments are HERE

Looks like that for this politician selling our assets to people of other countries is OK.
Just try to purchasing real eatete in Japan and you will know how proud are them and how are protecting their land.

The "super tax" on mining is nothing short of a vote catching exercise aimed squarely at the same people that the "cash handouts" were given to during the GFC - and that is those who are too blind to see past their own short term gain.

Why the mining industry - well pretty obvious really - if Rudd applied a similar tax to banks or the fuel industry as some have suggested, they would simply pass on the cost directly to their customers (you and I) who would be up in arms about the increase to our cost of living. The mining companies do not have this ability.

For those who believe that the "super tax" is being implemented to boost our superannuation - congratulations, you have been duped by Rudd's spin doctors who have achieved their aim by announcing the new tax and an increase to the basic super contribution in the same breath. The fact is though, that the increase in super contribution is to be funded directly by your employer - NOT from any tax on the mining industry.

The Australian mining industry is already the second highest taxed of any in the world - implementation of this ill conceived tax grab will make it by far the highest taxed in the world. Anybody who thinks that investors, wherever they come from, will continue to put their money into an industry where there are options available which offer a higher return, is simply living in lala land.

Other than what is being currently seen on the share market, the effect of this tax will have little effect in the short term. Existing mines are not about to shut down because of it. The real effect is the long term destruction of the industry (and hence, the Australian economy) as future investment dollars move offshore to projects offering a better return. This means that as existing orebodies are depleted, there will be significantly fewer to replace them - meaning less Australian jobs.

As for the comments that the mining industry has previously asked for a tax of this nature, and that the liberal opposition has been critical of the government for not imposing the full list of recommendations in the Henry review - both are true. But you have once again been taken in by Rudd's spin doctors and choose to selectively quote only those small parts of other people's comments as Rudd has done. The mining industry previously asked for a tax of this nature IN PLACE of the myriad of other taxes that it already pays, NOT as an addition over the top. Their aim (as was Ken Henry's) was to simplify the tax structure, and not to add additional layers of tax as a "cash grab" which was designed to boost their disastrous management of the Australian economy, and appeal to the short sighted voter who can't see past what it might mean for him/her personally in the short term.

Fortunately, I don't believe that this new "super tax" will ever see the light of day. It is more likely that one (or more) of the following will happen -

1. Rudd will make another "backflip" when he realizes that this is likely to cost him an election.
2. Rudd will be voted out at the coming election and the replacement government will not implement the tax in its current form.

It is quickly becoming plainly obvious that the majority of Australians are not in favour of this tax - leaving only the short sighted in agreement with it. Personally, I feel that this might just be the straw that breaks the camels back for the Rudd government. This mob has bumbled along from one stuff-up to the next (cash handout vote catching exercise, insulation debacle, disastrous schools projects to name just a few). It is looking more and more like the writing is on the wall for them. While I'm no great fan of the opposition either, at the moment I think that a robber's dog could do no worse than the disastrous rabble in charge at the moment.

JDNSW has the most comprehensive understanding of the industry and the issues surrounding this proposed tax that has been posted on here (and that I have read in many sources). Together with a few other posts in a similar vein, these would make good reading for anyone who really wants to understand the issues, and not just be sucked in by political spin.

And as for those who say "let's leave it in the ground" and stop exporting raw materials - yeah righto - let's all move back to the dark ages. Yes, value adding and selling downstream processed goods and materials is the logical way to go, but the facts are that Australia has never been able to achieve this, and but for a few small scale examples, never will.

I do agree though, that mining (and urban expansion) into areas which have for generations been the "food bowl" of Australia make no sense at all. most mining however, is outside of these areas.

We only get paid once for our natural resources. Once the stuff is dug up and shipped out there are no more paydays. We need to get a good price. To date we have not.

There should also be a mandatory amount of value adding. Not just dig it up and ship it. We should be doing something with it that will employ the large number of unskilled and semi-skilled people. Manufacturing and processing are the only ways of doing this.

Yes - we only get paid once for natural resources, but whether we get paid enough or not is a matter of opinion (and market forces). I believe that Australia has done pretty well over all in what we get paid, especially when compared to what many other countries get paid for the same materials.

Yes - value adding is the way to go - in theory. The problem is that the industry required to achieve this on a large scale is hugely expensive, and there is simply not the money available in Australia to invest in this industry, especially when the same can be achieved offshore at a fraction of the cost. It has been tried - and failed - on numerous occasions.

And as for providing work for the unskilled and semi-skilled people - what unskilled and semi-skilled people? There is huge unsatisfied demand for labor in Australia as it is. Unemployment is at almost record lows. Why are companies having to bring in labor on 457 visas and the like already if there is this workforce available?

If there are people who cannot find work because of lack of necessary skills, I would think it better to upskill these people to enable them to fill the vacancies available.

Originally Posted by Brian Hjelm

We only get paid once for our natural resources. Once the stuff is dug up and shipped out there are no more paydays. We need to get a good price. To date we have not.

There should also be a mandatory amount of value adding. Not just dig it up and ship it. We should be doing something with it that will employ the large number of unskilled and semi-skilled people. Manufacturing and processing are the only ways of doing this.

While this sounds like a good idea, it is a lot easier to state it than to actually do it.

Consider for example the three major export minerals.

Iron Ore. If Australia proposed to export only pig iron instead of iron ore, apart from the question of where the money was going to come from to set up the huge steelworks, the buyers would simply shrug regretfully and buy iron ore at a somewhat higher price from Brazil.

Coal. Most coal exported is used for power generation. How are you going to export power to China and Japan?

Natural Gas. Almost all exported natural gas is used for domestic and industrial purposes and power generation in Japan. How are you going to value add to it, beyond the already expensive liquefaction process?

Some minerals do offer the possibility of increased processing, but these are relatively minor players or can only compete with subsidies such as cheap electricity for alumina.

The price paid for minerals is set by the world market. In general this is what is paid for Australian minerals. If you mean the government take - the mining industry is already among the highest taxed in the world, so I don't quite know what you expect to happen and still keep much of an industry. There are very few if any minerals that can be obtained only from Australia, and the only way Australian minerals can be competitive is if they can be sold cheaper or on better terms than competitors. And the only way mining companies will operate in Australia is if the rewards are commensurate with the risks, and at least as good as alternatives.

Once the fair reward allowed is set at the long term bond rate, as the government proposes, why would anyone go into anything as risky as mining? Just put your money into government bonds. At least in the offshore petroleum industry the allowable profit is 11% not 6% before the resource rent tax cuts in.

Worth noting this quote, actually from an article on the National Broadband network:- "Finance Minister Lindsay Tanner admitted yesterday that a 6 to 7 per cent investment return was not 'in the zone that triggers an ordinary, commercial investment". So the question has to be asked - if according to the government, this sort of rate is not going to get someone to invest in a commercial operation, why would they expect miners to plan a risky mining project on that basis?

John

Originally Posted by Brian Hjelm

We only get paid once for our natural resources. Once the stuff is dug up and shipped out there are no more paydays. We need to get a good price. To date we have not.

There should also be a mandatory amount of value adding. Not just dig it up and ship it. We should be doing something with it that will employ the large number of unskilled and semi-skilled people. Manufacturing and processing are the only ways of doing this.

I am glad that I can see people that understand the value of our resources.
The problem is that too many people just read what ever "one side" view is posted in our media or the directors of the companies.
There is not need to read what are the opinion of the "experts"just have a look what it is going on in other countries and how proud are them about the assets of their country.
The same thing that it is going on with themines here is what it is going on in Tasmania with the wood chip. Just pure greed and short view of the future.
The idea of this people is just get the money and run!

Tax is a cost of doing business same as any other cost if your going to increase the cost of doing business in Australia by 40% than the accountants will simply look for places other than Australia to do business. The world is full of dirt and other places have the same minerals as Australia and cheaper costs of producing that dirt with varying differences in transporting that dirt to market.

So if the total cost of production of dirt is cheaper in Brazil, India, South Africa or anywhere else in the world that is where the money and the mines are going to go.

If Rudd claims the 40% dirt tax will fund superannuation increases he is lying and if he thinks the 40% tax is best way of funding superannuation he is fool as well.

Superannuation should be made tax free for any money going in and for anytime money held in investments and should only be taxed atnormal PAYE rates when you withdraw from your superannuaitona co**** and actually spend the money on goods and services.

Politicians have changed the laws and taxes regarding superannaution nearly every budget in the last 10 years and have totally gone back on the many reforms introduced to encourage people to self contribute to superannuation rather than rely on employer 9% contributions.

Rembering that every dollar you saved into your Superannuaiton is a dollar not required to be given to a pensioner by the Government.

Sooner we lose the Rudd and his band of theives and liars and incompetents the better the country is going to be