Resource Rent Tax deal finalised

[Jovial Monk]

yeah, skippy, not that Abbott needs much help to look silly

[Jovial Monk]

Hmmm reading coverage on the ABC website it looks like other miners than coal & iron ore will be drawn into the MRRT and the rebating of royalties is still occurring. So while idiots on the ABC website are calling it a “backflip” I don't think it is much of a one at all even without considering Tone saying he will oppose/rescind it, the looming election etc.

Professor John Freebairn, who teaches economics at the University of Melbourne, says the new version of the tax is better than the existing system, but not as good as the Henry review proposal.

He says it is modelled much more closely on the existing Petroleum Resource Rent Tax than it is on the Henry review's RSPT proposal.

"It's a move halfway along, in the sense that the existing Petroleum Resource Rent Tax, which largely applied to offshore oil and gas, will be extended pretty much unchanged to onshore oil and gas, which will include the new coal seam projects in Queensland," he told ABC News Online.

"And a version of that model is going to be extended, under the title of the Mining [sic] Resource Rent Tax, to the iron ore industry and the coal industry."

Professor Freebairn says a more worrying aspect of the tax compromise was how much influence the large mining companies and their lobby groups could exercise on the Government and media to force a change in policy that largely suits them.

"If I had a hundred million dollars to invest as a miner, would I spend it on trying to keep the tax rate down or would I spend it on trying to find more efficient ways to extract minerals?" he asked rhetorically.

"Unfortunately I think they rightly said it's better spending the money in trying to reduce the tax burden, and low and behold it seems to have worked. So this is quite a scary development for democracy."

Professor Neil Warren, a tex expert from the University of NSW, says the new model also adds complexity compared to the original RSPT proposal because of its application to only two sectors, and its depreciation allowances.

"Simplicity to a degree has gone out the window, that is, for those that are currently administering," he told ABC Radio's The World Today program.

http://www.abc.net.au/news/stories/2010 ... ion=justin

The Opposition has said it would block the tax and the deal struck has not swayed Mr Abbott.

"I think it's clear form the Prime Minister's comments this morning that battlelines are drawn for the coming election," he said.

"Any commitment that the Prime Minister made to the industry are as believable as her previous protestations to Kevin Rudd."

"This tax has to be dumped."

Opposition Treasury spokesman Joe Hockey says the new regime will be the most complicated in the world.

He has accused Wayne Swan of being the most incompetent Treasurer Australia has ever had.

"This is not tax reform, this is tax confusion," he said.

Resources Minister Martin Ferguson has told The World Today Mr Abbott is now alone in his opposition to the tax.

http://www.abc.net.au/news/stories/2010 ... ion=justin

Xstrata Copper is resuming millions of dollars worth of projects in north-west Queensland after Federal Government's changes to the mining tax.

The Federal Government announced big changes to its planned super profits tax today.

The tax would be levied at 30 per cent, instead of 40 per cent, and the definition of a super profit has been lifted from 5 per cent to 12 per cent.

Small miners earning profits below $50 million a year will not be included in the tax scheme.

The tax will only apply to iron ore, coal, oil and gas, and only 320 companies will be affected.

Xstrata Copper company had shelved its Ernest Henry underground mine and exploration activities, near Cloncurry, worth more than $600 million.

But Xstrata Copper says today's proposal to retain the existing taxation and royalties for copper has given it confidence to recommence operations.

Xstrata spokesman Myles Johnston says it is hoping to bring contractors back on the Cloncurry site soon.

"We've been suspended for about a month but we've been talking to those groups and hope to get them back on site as soon as possible," he said.

http://www.abc.net.au/news/stories/2010 ... ion=justin

Bah, they never stopped, Xstrata continued buying land around the development.

[pierre]

Excuse my ignorance boys and girls but given that a 30% company tax already applies where does this new tax fit into the picture? Is it on top of the existing company tax?

[IQSRLOW]

Any profit over the 10 year bond rate (~5-6%) +7%= 30% of those profits will be grabbed by the govt.

30% (or 29%) company tax still applys

= more money for this govt to throw down the drain on hair brained schemes

[sprintcyclist]

pierre - I think the new tax comes out before the old one. but both taxes do apply

thaere is also a new clause, where miners can write off cost from old mines. Or someting in that area. It means little on paper here, but might be a BIGGIE for older existing miners for quite a few years.

[Jovial Monk]

It is on top of the company tax.

[sprintcyclist]

found it .



"To set a couple of things straight that were not clear from this morning's media conference:



The Henry concept of ''uplift'' has been junked along with the government partnership idea. What is still unfortunately being called ''uplift'' - at the much more generous rate of the bond rate plus 7 per cent - only applies to carrying forward losses on projects.
The big new factor, of just as much importance as cutting the rate from 40 to 30 per cent, is a 25 per cent extraction allowance that ''recognises the contribution of the miner's expertise to profits at the mine gate''.
The name change, from the loaded ''Resources Super Profits Tax'', to Mineral Resource Rent Tax is an improvement, a step away from the Viva Cubana school of nomenclature that characterised the Rudd government, but it's not right. It's there because of kinship with the now-expanded Petroleum Resource Rent Tax. The real name is mentioned in the Resources and Energy Department attachment to the official announcement - the Bulk Commodity Resource Tax.
There's an admission that the Swan/Henry RSPT was even more inefficient, complex and stupid than it appeared - or there's something seriously wrong with the figures here. That these changes are only going to cost $1.5 billion over the forward estimates is utterly amazing.
And if the changes only knock $1.5 billion off the government's bottom line over four years, it won't have much trouble finding the money to reinstate the promised and rather far-off further cut in the corporate tax rate to 28 per cent. Gee, that's only a few Pink Batts and school sheds.
Of course, if the old Wayne Swan had actually read and understood the Henry Review, he would already have known that his department head thought the ''elegant'' tax he pursued with a vengeance was too inefficient and costly to apply to lower-value minerals. Only a goose would have proposed applying the RSPT to limestone and gravel. But, in the phrase of the month, they're ''moving forward'' from all that.

Number crunching

To explain how the 45 per cent effective tax rate is derived: Let's say BRX Mines makes $100 profit at the mine gate on iron ore, the new 25 per cent extraction allowance reduces that to $75 before the bulk commodity resource tax is charged at 30 per cent, so the MRRT bill is $22.50, leaving $77.50 in pre-company tax profit. Company tax is then levied at 29 per cent on the $77.50 = $22.475. Round that company tax up a fraction and adding it to the MRRT, BRX is paying total tax of $45 - the same as the new top personal income tax rate without the Medicare levy. Neat, eh?

Your humble correspondent has argued from the start there was a psychological hurdle in the RSPT model of the government taking more than half the profit, never mind the ''we own the minerals'' line.

It's very hard for all but the most doctrinaire (i.e. Clive Palmer) to claim that it's unjust for fabulously profitable mining companies to just pay the same top tax rate as individual Australians. As previously reported here, the RSPT effective tax rate would commonly be around 55 per cent for the biggest players, as potentially as much as 77 per cent.

BRX also gets to depreciate its old, extremely profitable mines all over again for the MRRT accounting to escape the ''retrospectivity'' charge. Along with the rest of the allowances, rebates and deductions available to the industry, they really don't have anything to complain about.

Missing piece

And yet to come is some sort of exploration incentive that will be discussed by Martin Ferguson and Don Argus. That looks to me like ''flow-through-shares'' will be back on the table - the incentive much wanted by the smaller miners and explorers.

(Flow-through-shares allow the passing on of tax deductions for losses to investors, in much the same way franking credits for tax paid by profitable companies are passed on to shareholders. The Canadians introduced the scheme and caused an explosion of exploration activity. The local exploration industry body, AMEC, has pushed modelling that claims it would only cost the government $130 million a year - but the whole business of modelling has had its credibility diminished over the past two months.)

Never mind that the Henry review specifically recommended against exploration incentives. It also recommended against lifting the super guarantee levy. Today's major changes to the old Wayne Swan's botched version of the Henry resources rent tax effectively buries the Henry review in total.

Nothing major has survived, just a couple of passing concepts that have been modified almost beyond recognition. It would take must stronger leadership and saleswomanship to revive the better ideas "moving forward''.



http://www.theage.com.au/business/henry ... utostart=1

[sprintcyclist]

Let's get this right:
Increase the super tax threshold by 50% (from ~6% to ~12%);
Reduce the super tax rate by 25% (from 40% to 30%);
Exempt alumina, aluminum, copper, diamonds, gold, lead, manganese, nickel, phosphate, platinum, quarry products, rare earths, silver, tin, uranium and zinc (super tax only applies to coal and iron ore);
Tax revenue is only reduced by 16% (down $1.5 billion from the budgeted $9 billion).

Something does not add up here.

[Jovial Monk]

Betting markets increasing the probability of an ALP victory!

http://blogs.crikey.com.au/pollytics/20 ... friday-15/

Great news! It means the country continues to benefit from the extra money from miners—the lower company tax, the increased super, infrastructure etc, especially the last which will be needed when the second leg of the GFC stamps down.

[IQSRLOW]

What about poor Kev who you were championing through betting markets and polls, even when he was failing right up until Julia thrust the sword into his heart?

What a fair weather fuckwit you are!

I'd expect better odds with a new leader this close to an election...and the polls have already shown that the 'bounce' has been like a skydiver without a parachute or your and Demi's wedding night Monk- small with a lot of blood

I'd say Julia's honeymoon period will be very short lived and she will have to call it soon to capitalise because if her next 'reform' or what is known as 'humiliating capitulation' in Swans office nowadays, is on illegal immigration, it will see her move to the right and I can just imagine the howls of indignation from you leftards.

"Oh what a good move Julia"
"Yes, the boats coming were a worry"
"Julia's opened a humane mandatory detention centre with all mod cons on the mainland"
"They can be kept in comfort for 6-12 months while in limbo"
"Pip Pip hooray Julia"

Fucktards