The Mining Tax!

[Phyllis Stein]

I see so many people, here and elsewhere online, repeating what appear to be 'soundbites' regarding the proposed tax. The tax is just so extremely complicated that you would need a degree in economics to evaluate it fairly, so most of us have to make our judgements based on the opinion of others.

Considering the enormous and (I believe) hugely misleading anti-tax campaign being run by Big Business atm, I thought it might be good to share more objective perspectives on the tax.

So, it's a thread to discuss your opinions and hopefully also the sources of information that helped you come to it, from any of the sides of the issue. Maybe that would help other people come to a considered judgement about the tax, and vote accordingly.

I'll start. I bolded the best bits. :D


From here (http://www.abc.net.au/news/stories/2010/06/23/2934885.htm).


IMF backs mining tax

The International Monetary Fund has given its support to the Federal Government's planned resource super profits tax.

The deputy head of tax policy at the IMF Philip Daniel has told a tax conference in Sydney this morning the proposal is a worthwhile reform.
He says there are a number of benefits in the RSPT which could also be adopted in other countries.

"IMF staff welcome the RSPT proposal in principle. It shifts the whole Australian resource tax system strongly in the direction of neutrality," he said.

"It offers strengthening of Australian public finances over the long term, reduces risk of absolute loss for investors, while leaving a substantial share of resource profits in private hands."

The IMF also says there is no indication that the Federal Government's proposed RSPT would hurt Australia's economic prospects.

Mr Daniel says the argument that the tax would hurt Australia's competitiveness is overstated.

"The tax proposal doesn't show adverse effects on Australia's economic prospects either," he added.

"Consensus forecasts offer evidence that the outlook for business investment has in fact strengthened for Australia in recent months."

He says not enough focus has been given to the benefits the mining industry should gain through the Government's assumption of some of the project risk.

"The argument on tax competitiveness too tends to ignore the fact that the new proposals incorporate large risk bearing by Government - to the extent of 40 per cent of losses and more in the case of exploration," he explained.

"Few other jurisdictions seeking petroleum and mining investment are able to offer that."

However, a resources economist says the super profits tax proposal may not raise as much money as the Federal Government predicts.

Ben Smith is a visiting fellow at the Australian National University and says the retrospective application of existing projects would guarantee solid revenues, but only in the short-term.

"In the long run, the Government is going to earn 40 per cent on the average rate of return of mining and in the long run that's not guaranteed to be particularly high," he said.

"It could even be negative - that's unlikely but, you know, there are risks associated with it and the Government really needs to spend the revenue taking account of those long run factors."

However, he also says the mining industry's campaign has been misleading and potentially damaging.

"To tell people that the consequence of this tax is that all mining industry profits will be taxed at the rate of 56.8 per cent and that this is the highest tax rate in the world - which is a gross distortion of the actual consequences of the tax - is likely to make people think twice about whether they want to invest in mining in Australia, until they see that this is a gross distortion," he added.

[London]

The way I see it is, they are taking things OUT of Australian land and making a killing...so why shouldnt they get taxed for it?

[Benji]

I received this:



The facts about the proposed Rudd Labor Government mining super profits tax
If the price of iron ore in 2004 was $100 a tonne, today it is $600 a tonne.
If the price of hard coking coal in 2004 was $100, today it is $400 a tonne. (http://www.bubhub.com.au/community/forums/newreply.php?do=newreply&noquote=1&p=4890847#_edn1)
If the cost of labour in the mining industry in 2004 was 100, today it is just 127. Labour makes up 15 per cent of costs in the mining industry. Fuel and machinery costs have also increased in these last five years, but again, nothing like the prices gained.
In 2004 the iron ore export industry and the coking coal export industries were enjoying huge profits. So today they are enjoying profits beyond their wildest dreams – because costs may have also increased in these last six years, but nothing like the prices. For example, BHP Billiton alone declared a profit of $10.7 billion in 2009, and predicts a profit of $23.5 billion in 2011.
The mining bosses are going berserk at the Rudd Labor government – which has been very friendly to them – because they see this super-profits tax concept in Australia as the start of a global move by governments to increase the public share in the global minerals boom.
It is a global conflict between huge mining corporations like BHP-Billiton, Rio Tinto and Xstrata on the one hand, and hundreds of millions of people in mineral rich regions in Asia, Africa, Latin America and Australia.
· Norway has a super-profit tax of 78 per cent – and the multinationals pay.
· Chile- the largest copper producer - is proposing a new mining tax to take an extra $12 billion this year. BHP Billiton, Rio Tinto, Xstrata and Anglo-American are investing $48 billion there to 2017.
· Brazil – the largest iron ore producer – is planning a bigger tax take from mining.
· India is proposing a windfall profits tax on non-fuel resources. (http://www.bubhub.com.au/community/forums/newreply.php?do=newreply&noquote=1&p=4890847#_edn2)
GLOBAL SOCIAL JUSTICE - WHICH SIDE ARE YOU ON?
Unless all the progressive organisations and movements support the Labor government’s proposed mining super-profits tax, the mining companies, who have now won the support of the top 100 multinational corporations in the Business Council of Australia, will force the government to back down. This would be both a global and a local defeat for working people, which we cannot afford.
This puts Australia in the front line of a global struggle for social justice and human rights. If we can unite, and seize this moment, we can make a difference. The predictable failure of the Rudd Labor Government to build popular support for this measure is no excuse for the Left and Labour movements to sit on its hands in the face aggressive corporate attack on a progressive measure.
Yes, the mining export companies have paid a lot of tax in absolute terms in the last decade, but they have continued to pay state mining royalties set for an earlier period when iron ore and coal prices were much lower, and profit margins thinner.
This was a gift from the Howard government which also made sure that mining companies could impose individual contracts on their workers, minimise any land rights and native title claims that they might have to deal with, and scuttle any serious action on carbon pollution of the climate.
The mining super profits of recent years are first of all taken from the lands of indigenous Australians, and in the second sense, taken from us all, because they cannot be renewed. The Mining Super-Profits Tax will give back a share of the windfall that giant mining companies are reaping to the people who own the minerals in the first place.
The Rudd Labor proposal is positive but quite moderate:
· The government refunds to mining companies 30 per cent of their exploration costs
· Mining companies pay state royalties based on the volume of minerals extracted, not on profits
· “Super Profits” are defined as the profits after deduction of operating costs, cost of capital and a modest profit defined by a 10-year bond rate, and these super-profits are taxed at 40 per cent, instead of the current 30 per cent company tax rate.
· One-third of the super profits tax goes to an infrastructure fund mainly to be spent to help the mining industry.
· Another part of the super-profit tax repays the mining companies for the royalties they have paid to the states.
· The remainder of the super-profit tax will go to the federal budget and some of it will be used to increase superannuation contributions from 9 per cent of wages to 12 per cent, and some will be used to reduce the normal company tax rate from 30 per cent to 28 per cent.
In other words, the Rudd Labor government is giving most of the benefits to the super-profit tax to the mining industry and to all other businesses, and the remainder to working families.
But it is no surprise that the global mining bosses are treating this moderate concept like toilet paper.
· They won concessions from the Rudd Labor Government on the Carbon Pollution Reduction Scheme, which rendered it useless and not worth pursuing when it came to the Senate. The subsequent abandonment of the CPRS has undermined the Rudd Labor Government’s credibility with the electorate.
· They won concessions from Rudd and Gillard prior to the 2007 election so that AWAs would continue until 2013 and the new Fair Work Act would retain a “strong (anti-union) cop on the beat”.
· They opposed national land rights laws in the 1980s and Native Title in the 1990s.
· After the global capitalist crisis struck in late 2008, the Australian mining companies sacked 15.2% of their workforce in the first six months of 2009 (20,500 people) without blinking[iii] (http://www.bubhub.com.au/community/forums/newreply.php?do=newreply&noquote=1&p=4890847#_edn3). This was despite the mining sector increasing its total income by 34.7 per cent ($47.2 billion) that year – the largest increase of any industry sector that year[iv] (http://www.bubhub.com.au/community/forums/newreply.php?do=newreply&noquote=1&p=4890847#_edn4).
Now they threaten to ‘go on strike’ against a policy which will help most Australians who have to pay their taxes regardless of their income. But under the Fair Work Act if workers ‘go on strike’ without approval they are treated as criminals, and can be fined and jailed.
The mining companies are ruthlessly using workers’ jobs as a scare tactic in the political game. The CFMEU Mining & Energy Division, the union for many mining workers, is standing up to this bullying, and so should all unions.
The myths
· The big mining companies ‘care about all Australians’ – yet most of their shareholders live overseas. The two most powerful mining bosses are South African Marius Kloppers and US citizen Tom Albanese, who between them are paid $19.7 million this year. They care about themselves and their shareholders.
· The super-profits tax is ‘retrospective’. Actually the tax is not on profits from years past, but would begin in 2012. The mining companies are objecting to [I]any change in taxes.
· The super-profit tax makes Australia the most risky place to invest. Sure – worse than the Congo, Madagascar, Zimbabwe …
These mining companies are opposed to the Australian parliament making a law that they don’t like, but they rely on government support for all their operations. They should be forced to accept our democracy – or perhaps they should really be nationalised – which the hysterical Andrew Forrest of Fortescue Metals has been claiming the new super profits tax is doing now.
There is no sector more worthy of expropriation in the public interest than mining companies who cheat and manipulate using their huge wealth to resist social and environmental accountability. This demand should be raised against the increasing hysteria being whipped up by the mining bosses.
Improve the mining super-profits tax
The Rudd Labor government should explicitly:
· commit a portion of the super-profits tax to the indigenous people of the lands where the minerals are extracted, and to all indigenous people through their own community organisations.
· commit another portion of the super-profits tax to the mining communities who have to live through the pressures associated with delivering the enormous wealth from mining today, so that their often deteriorating facilities can be lifted to national standards.
· abandon the cut in company tax to 28 per cent.
[I]SEARCH Foundation, June 9, 2010

[i] (http://www.bubhub.com.au/community/forums/newreply.php?do=newreply&noquote=1&p=4890847#_ednref1) Ross Gittins, Sydney Morning Herald, Business, May 31, 2010.

[ii] (http://www.bubhub.com.au/community/forums/newreply.php?do=newreply&noquote=1&p=4890847#_ednref2) CFMEU Mining & Energy Division information sheet – www.cfmeu.com.au

[iii] (http://www.bubhub.com.au/community/forums/newreply.php?do=newreply&noquote=1&p=4890847#_ednref3) Ken Henry, Senate Economics Legislation Committee Estimates, May 27, 2010, E12

[iv] (http://www.bubhub.com.au/community/forums/newreply.php?do=newreply&noquote=1&p=4890847#_ednref4) Australian Bureau of Statistics, Australian Industry, 8155.0




email from my boss, I think it was from "Now We the People".

I also prefer this (http://www.youtube.com/watch?v=H4PcQfz0MfU) ad, also produced by my workplace, rather than the manipulative ones on TV produced by the Minerals Council.

[Guest]

I don't know, don't know enough about it really. I know that with the resources, we have had a huge boost in the country for years, people have been making money and spending it in this country which isn't a bad thing because it keeps people in jobs, including myself and dh.
Do they need to get taxed more, probably, because it'll benefit the country as a whole, but is the current rate they've proposed fair? That's what I don't know, I do know if they stop mining in this country we will be worse off, I don't doubt that, but will they stop because they get taxed more???

[Guest]

Thanks Benji:)

[IndigoJ]

I didnt read all that writing, but my DP works in Mining and the talk around the camp is they will get a paycut, if the tax thing goes ahead.

[Amara]

The people of Australia should benefit more from our natural resources. Also if it doesn't go through I would not be surprised if we all end up paying for it with a higher gst rate. The money has to come from somewhere.

[Annabella]

Thanks Phyllis, I've been wondering about this for ages. Can someone just explain it in very basic terms- is it just that the mining companies will be taxed at a higher rate on their profits?

[Pregnor]

I work in the environmental part of the mining industry. There are many minor projects that are questionable, wanting to take low grade minerals from areas with high environmental values. Sadly, despite environmental values, some of these get through. I which I beleive is incredibly greedy. I think the super tax could potentailly stop some of these projects from happening as maybe the potential profit would become too low for it to be worth it. A good thing im my eyes.

I dont beleive the government is receiving enough money, considering the facilities and jobs that are needed to keep the industry going.
If you looked at the state herbarium in western australia. It is struggling. There is nowhere near the funds they need to keep it going, and it is fueled by volunteers. Its ridiculous. The govt keeps pulling funds away from it. Yet it has such a vital role in the environmental assessment of mines. It is ridiculous.

With the tax the big mines will continue to run. They are protesting it as they need to protect their shareholders, and their profits. Of course they dont want to pay it. But if their profit goes from 10b to 4b, then they are still making a good profit.
I dont beleive many people will not lose their jobs, the wages come out before the tax.

My prediction is some of the smaller operators might shut down. Exploration will slow as cost vs potential gain will change. Some people may lose jobs, but it wont be as wide scale as people believe.

[TripleTime]

I didnt read all that writing, but my DP works in Mining and the talk around the camp is they will get a paycut, if the tax thing goes ahead.


We've heard the same, DF's follow on mining industry.

Not cool in my book :no:

[Sheer Bliss]

:yelclap: good idea. TBH I thought the way Krudd has bought the tax into play is wrong. Springing it last minute, with no consultation etc - not a wise move. However I have not been able to comment ont he tax itself as it is far too complex for me to understand (baby fried brain still not back on track - lol)

[Pregnor]

I think threats of job losses and pay cuts are just scare mongering personally . A pay cut for workers wont increase their profit much, its only 15% of costs. Then if you consider the loss of productivity caused by having unhappy staff. It would be a bad move in my opinion.

They want the workers to be scared by it, workers are voters, as are their wives and families. They want the public pressure to go against the tax, so they keep their high profits

[Love is all you need]

I think threats of job losses and pay cuts are just scare mongering personally . A pay cut for workers wont increase their profit much, its only 15% of costs. Then if you consider the loss of productivity caused by having unhappy staff. It would be a bad move in my opinion.

They want the workers to be scared by it, workers are voters, as are their wives and families. They want the public pressure to go against the tax, so they keep their high profits
:iagree::iagree:

Just to post the exact same thing - they are scaremongering in a way so that they can vote out this reform...I do not see it as a bad thing this tax - however I think the scaremongering campaign will win.

[IndigoJ]

I think threats of job losses and pay cuts are just scare mongering personally . A pay cut for workers wont increase their profit much, its only 15% of costs. Then if you consider the loss of productivity caused by having unhappy staff. It would be a bad move in my opinion.

They want the workers to be scared by it, workers are voters, as are their wives and families. They want the public pressure to go against the tax, so they keep their high profits

He was told this by his bosses, BHP Billiton. He is a contractor so they can sack him and rehire him at a lower rate. TBH i would have voted against the tax, whether it was just scaremongering or not, it would mean less pay, the talks were a cut of $10 an hour, which is a lot.

[Sheer Bliss]

I think threats of job losses and pay cuts are just scare mongering personally . A pay cut for workers wont increase their profit much, its only 15% of costs. Then if you consider the loss of productivity caused by having unhappy staff. It would be a bad move in my opinion.

They want the workers to be scared by it, workers are voters, as are their wives and families. They want the public pressure to go against the tax, so they keep their high profits

:iagree: Talk around the water cooler is almost never the truth.

[Pregnor]

I understand that IndigoJ. You have to protect your family.

I myself stand to lose my job if mining decreases, expecially exploration. But I still think the tax is overall a good thing for the country and for the environment

[Ana Gram]

I understand that the little people involved with mining feel threatened, because they are being threatened. But that threat is not coming from the government. It is coming from the mining corporations who are making billions of dollars. Their opposition to the tax is an opposition to not making as many billions of dollars. Holding employees over a barrel with threats of job losses and pay cuts is despicable.

[trishalishous]

Thanks Phyllis, I've been wondering about this for ages. Can someone just explain it in very basic terms- is it just that the mining companies will be taxed at a higher rate on their profits?

in a word - yes :)
which should encourage the companies to invest in improvements.
this is good for communities in general.
crown casino paid $100 in tax last financial year, as they are building a new hotel, which is claimed as an expense.
and its not like the mining companies have the communities best interests at heart and don't already cut and run if there's a threat to profits, check out BHPB and the Ravensthorpe nickel project.
two towns pretty much closed when BHP decided to stop the project (and workers were told at 9am, then off site by that night)

and on a basic level ANY ultimatum from a side,will ALWAYS make me choose the other. we shouldn't be held to ransom by big business.

[IndigoJ]

I understand that IndigoJ. You have to protect your family.

I myself stand to lose my job if mining decreases, expecially exploration. But I still think the tax is overall a good thing for the country and for the environment

:)

Dont get me wrong, i would love for them to get taxed more, but not taking money off the workers to pay for that tax, instead of their own HUGE profits, DPs mine alone stands to lose 12.8B dollars everyday the mine is closed for shutdown, sure their expenses are high but i doubt they are higher than 12.8b dollars. The mining companies are so greedy they will take the tax from the hardworkers, not from thier profits.

[Annabella]

He was told this by his bosses, BHP Billiton. He is a contractor so they can sack him and rehire him at a lower rate. TBH i would have voted against the tax, whether it was just scaremongering or not, it would mean less pay, the talks were a cut of $10 an hour, which is a lot.

That makes me so angry its just plain greedy.


in a word - yes

Thanks. Well in that case, only knowing the basics, I think its fair. People who earn more have to pay a higher tax, so I don't understand why businesses that make more money shouldn't have to. Especially when we're talking in the $billions. Obviously my knowledge on this subject is very limited though :)

[Deserama]

Yes but would a pay cut for workers make that much of a big deal? If you earn say 80k wouldn't it just mean you might get 75k or something? Is that such a big deal?

[IndigoJ]

Yes but would a pay cut for workers make that much of a big deal? If you earn say 80k wouldn't it just mean you might get 75k or something? Is that such a big deal?

Yeh i suppose youre right, a paycut of $30,000 a year is peanuts.

[delirium]

I think threats of job losses and pay cuts are just scare mongering personally . A pay cut for workers wont increase their profit much, its only 15% of costs. Then if you consider the loss of productivity caused by having unhappy staff. It would be a bad move in my opinion.

They want the workers to be scared by it, workers are voters, as are their wives and families. They want the public pressure to go against the tax, so they keep their high profits

ITA. Scare mongering by the big boys to try and get the workers on side to oppose the tax. Now I'll admit I don't have a fullunderstanding of the mining industry and their workplace practices. Maybe they might do sub contracting and pay less? But they can't go below the award and there are regulations to protect workers.

Just sounds like a bit of a tantrum by the mining companies. Take a bigger cut of the billion of dollars we get from stripping the environment clean, and we'll punish the workers :no: In fact it sounds like blackmail to me.


I understand that the little people involved with mining feel threatened, because they are being threatened. But that threat is not coming from the government. It is coming from the mining corporations who are making billions of dollars. Their opposition to the tax is an opposition to not making as many billions of dollars. Holding employees over a barrel with threats of job losses and pay cuts is despicable.

Exactly. While I fully understand that families of miners need to pay their bills and put food on the table, they should be putting pressure on their employers to keep their entitlements. The enemy isn't the govt, it's the greedy mining companies. :rolleyes:

[trishalishous]

Yeh i suppose youre right, a paycut of $30,000 a year is peanuts.

what percentage wage cut are they quoting?
I'm ex-mining industry myself.
if wages drop considerably people will just leave the industry. DH was on a 2weeks on 2weeks off FIFO (15 12hr shifts a month), and on 110k (lab tech) he was offered 90k +overtime in Perth, (it worked out a higher hourly rate and he got to stay home) so changed companies.
from what I understand (and Ive done exactly two economics units at uni, so correct me if I'm wrong) the tax is on profits over x amount. and workers wages are an expense, so wouldn't it make more sense to increase expenses (which means a decrease in profits) such as wages?

[spoon]

:smiliedance::smiliedance::smiliedance::smiliedanc e:

The mining council has pulled their ads off tv in a sign of good will towards the governement and new leadership!!!!!

They are entering into negotiations!!!!!

:smiliedance::smiliedance:

Go Julia!!!!

[KatiesMum]

At the moment, the mining industry already pays an ENORMOUS amount of money to the government.

They pay royalties to the state government based on the volume of dirt removed from the ground.

They pay infrastructure costs to communities to set up mines and sites, environmental fees and clean up fees, fees of varying other nature for various other things.

They make a commitment to employ a percentage of local aboriginal workers, train them, develop the community etc.

They pay 30% tax on all profits - just like every other company. The more profit they make, the more tax they pay.

They also get significant tax concessions on development and exploration, on fuel and other areas, making it very difficult to establish the actual amount of tax paid .... so both sides manipulate figures to suit their own argument.

I do not have an issue with reforming the taxes paid in this sector ..... but making it even more complex and difficult is not the answer.

The Federal Government do not want to REFORM the tax ... as the most effective tax would be to increase the royalties - but that is a state tax and the federal government want the money - so instead they come up with a dogs breakfast to try and get the money for themselves.

Applying the changes to current projects changes everything for those projects, and is why the companies involved are talking about wages cuts etc. Each project is assessed on its own profitability, and to change that half way through is just ludicrous and WILL result in mine closures and job losses.

The Henry Review itself recommended exclusion for quarrys due to the effect it would have on the housing and construction sector - but that has not been taken up, so the cost of housing WILL go up substantially as the cost of bricks, cement, steel etc all increase.

Both WA and QLD will be very hard hit with major players no longer developing new mines/projects and reasssessing current ones in favour of investing their capital in other countries with more favorable investment conditions.

[delirium]

I think you make some worthwhile arguments Katiesmum. If the mining industry was on it's knees, then I might have a softer stance. As I have said there needs to be a happy medium between keeping the industry alive for it's workers and expecting a cut for the damage they are doing to the environment.

But they are making giant profits. Depending on the position, mining can be hard work, long hours, extended periods away from family. But people do it bc it's a good pay. Lessen the pay and the flow of employees will dry up. Afterall, why be away from family for 2 weeks at a time for the same pay in a job where there is no FIFO?

I think it's bluff by the mining industry. They are like a sulky child that is taking their bat and ball and going home.

[KatiesMum]

Depending on the position, mining can be hard work, long hours, extended periods away from family. But people do it bc it's a good pay. Lessen the pay and the flow of employees will dry up. Afterall, why be away from family for 2 weeks at a time for the same pay in a job where there is no FIFO?



they wont 'cut pays' so much as cut the amounts paid to the contractors ... the companies who contract to supply food, cleaners, chefs, mechanics and services etc.

Those companies will cut pays ... and people will still work for them because the alternative is 'less pay or no job'.


Mines will close ... and those with contracts will go to other sites and replace people on those sites who dont have contracts. (Ravensthorpe in SW WA is a good example .... its uneconomical so it closed - with 1 days notice.)

Currently in WA we have a labour shortage, so it wont be felt much immediately - but new projects wont start, and in the future we will have LESS. Less everything.

WA is leading Australia out of the Global Financial Crisis. The reason we have had a huge pot of cash to spend our way out is because of the mining industry ... and the reason we will return to surplus earlier than other countries is due to mining.

That is what is at risk.

[delirium]

I don't deny the role the mining industry has had in stabilising us during the economic crisis. I guess my issue is these companies making obscene amounts of money from taking non renewable resources (well it will take hundreds of thousands of years to replace so essentially non renewable)from our country.

As I said, it is really backmail from them, and I don't like bullies. Unfortunately the ones that will pay with be the average joe that works there trying to provide for their families.

That's why I have trouble understanding why mining families are defending the companies. They are growing insanely rich off your (a general 'your') family's work investment in their company. Now they are threatening the very people that have made them rich. Poor form imo.

[brogeybear]

Trish I have to say that I totally agree with what you have said. I would love to have the time to actually read the governments proposition, but alas I do not. But the propaganda from the multi billion dollar corporations is terrible. They are using bullying threats to sway their workforce, yes the voters against it, since they obviously want to keep their massive profits.

I am not saying that absolutely everyone will be immune if the RSPT were to go ahead, but that the causalties would be far less than what is currently being made out. The points have already been brought out, but wages and outsourcing (ie. cleaning, food, etc.) are expenses. It would make no sense to reduce these as they are in fact tax deductions.

Thanks for posting that second link, whoever did that, I cant remember. Sorry. It is worth reading (as is the OPs link ;P )

[Bubmum]

I don't think you need a crystal ball to predict what will happen next. A modification will be made to the propsed tax, the mining companies will take money off of some of the smaller contractors (so as to look like they meant what they said, and that at no point were they bent over a barrel), and everyone will throw rocks at kevvy as he walks home from the schoolyard, alone, after he really tried to do his best. It's all rather nauseating stuff.