Ken Henry Tax Reform

[Calliope]

Calliope old mate the irony of your address cracks me up every post!

You obviously crack up very easily. I'm not surprised.

 

[Gar]

Can somebody please tell me if this 40% super profit tax is across all resource companies or just the top tier fellas.

The media only seems to talk about the big boys

 

[Calliope]

You forgot the 7th and most common hat on forums: Asshat
ass-hat
One whose head is so far up their rear end it could pass for a hat; used to describe a person who is stubborn, cruel, or otherwise unpleasant to be around.
(aimed at no one)

Good one moXJO. A little bit of satire will beat a thousand words of preaching every time. It pointless trying to debate with asshats as they tend to get very nasty when cornered.

 

[Whiskers]

@ whiskers - Please don't derail the thread?

I'm doing my best Sir...

I thought I would try politeness

thank you. I like that.

as you don't seem to be responding to all the negativity being thrown your way.

True... I've been trying to steer (facilitate) some of the comments and their authors away from confrontational debate and put downs, to more dialogue.

"The Rudd government's proposed 40 per cent Resources Super Profit Tax announced Sunday has been slammed by the industry, along with BHP Billiton’s Marius Kloppers and Fortescue Metals Andrew Forrest, and yesterday caused $9 billion to be wiped from the value of the ASX’s top 100 miners.

The tax is expected to commit an extra $12bn to the tax pool by 2014."

Nice one Kev.

Cheers

Sir O

That's true, except for caused $9 billion to be wiped from the value of the ASX’s top 100 miners.

Given that the world markets were already in a correction before this announcement was made, I'm not sure how much to attribute the sell-off of the miners in particular to the proposed new tax.

Also as of a couple days ago, the latest polls have the coalition winning an election now. I've no clear idea about the coalition position as I've not seen Abbott make any endorsement or rebuttal of the review. So is the industry and markets concerned that the coalition wil also adopt the 'super' or windfall' tax too.

I seems inevetable that some sort of new tax and or rearrangement of the system will occur, at least under Rudd, but how much extra it will cost the miners and what the trade-offs are I can only speculate until I can get a bit of a picture from seeing what signals and trail Rudd is leaving a bit further down the track.

 

[Whiskers]

Can somebody please tell me if this 40% super profit tax is across all resource companies or just the top tier fellas.

The media only seems to talk about the big boys

Good point... and I don't think anyone knows how it will all pan out in the end or whether the coalition (since they are now in the lead in polls) will also endorse something similar or not.

The best I'm ably to imply is firstly, that the tax is intended to reap back some of the higher profits that some big companies are making from resources, and...

Secondly, that Rudd has taken Henry as bait and cast it out there in the public domain to see what activity it creates and will probably decide, after inspecting what is responding, on some specific burley (sweeteners) to catch his target and leave the rest of the shoal (community) relatively unaffected and content.

 

[Judd]

From what I have been told the tax is to apply to extraction industries. This would include sand mining for glass production, crop fertilizers, even brick makers.

Lots to look forward to it would seem.

 

[moXJO]

That's true, except for caused $9 billion to be wiped from the value of the ASX’s top 100 miners.

Given that the world markets were already in a correction before this announcement was made, I'm not sure how much to attribute the sell-off of the miners in particular to the proposed new tax.
.

I would agree with the above statement. Unfortunate timing for Rudd's announcement.
As for the tax I am in two minds about it.

Still very early days. And as to what this tax will look like by the end of the squabbling is anyone’s guess. Main concern is an ETS hitting miners in the next few years as well.

 

[Julia]

Given that the world markets were already in a correction before this announcement was made, I'm not sure how much to attribute the sell-off of the miners in particular to the proposed new tax.

Agree this is very relevant. The whole market is down in one of the worst days for months. Obviously the broader market is reacting more to Greece et al than the mining situation.

I've no clear idea about the coalition position as I've not seen Abbott make any endorsement or rebuttal of the review.

Well, Whiskers, you haven't been paying attention, have you? Tony Abbott has switched his rhetoric about a "great big new tax", first applied in criticism of the ETS, to the new mining tax and has declared he is opposed to it.
However, knowing Mr Abbott's propensity for changing his mind, that may be a, er, flexible response.

 

[Whiskers]

Still very early days. And as to what this tax will look like by the end of the squabbling is anyone’s guess. Main concern is an ETS hitting miners in the next few years as well.

Yes, an ETS would be a double wammy.

There's a lot of possibilities atm, what with the coalition now leading the polls.

Interesting that Rudd's vote has fallen much more than Abbot has risen. Is this a sense that voters think the coalition will be better for Turnbull being in there and maybe come back as leader.

Given turnbull supported an ETS of sorts and he probably will regain a significant role or leadership again, it could be that voters prefer a coalition and some sort of ETS in preference to a new resource tax and or an increase in super contrib's?

Apparently, from what I can gather, the large drop for Rudd and labor was attributed to the shelving of the ETS more so than the Henry reforms.

 

[moXJO]

Interesting that Rudd's vote has fallen much more than Abbot has risen. Is this a sense that voters think the coalition will be better for Turnbull being in there and maybe come back as leader.

Given turnbull supported an ETS of sorts and he probably will regain a significant role or leadership again, it could be that voters prefer a coalition and some sort of ETS in preference to a new resource tax and or an increase in super contrib's?

Apparently, from what I can gather, the large drop for Rudd and labor was attributed to the shelving of the ETS more so than the Henry reforms.

More likely that both parties are so hopeless that neither have the populations confidence that they can run the country.

 

[Whiskers]

Well, Whiskers, you haven't been paying attention, have you? Tony Abbott has switched his rhetoric about a "great big new tax", first applied in criticism of the ETS, to the new mining tax and has declared he is opposed to it.
However, knowing Mr Abbott's propensity for changing his mind, that may be a, er, flexible response.

Yes, that's why I'm not clear. He still hasn't completely shed his former chief head kicker role and rethoric to oppose for opposition sake, and fully made the transition to a pure leadership role and put out a clear policy position yet.

 

[Julia]

Interesting that Rudd's vote has fallen much more than Abbot has risen. Is this a sense that voters think the coalition will be better for Turnbull being in there and maybe come back as leader.

I don't think so. Probably more that the dumping of the ETS moved most of the fall off in Labor vote to the Greens and Independents.

Given turnbull supported an ETS of sorts and he probably will regain a significant role or leadership again, it could be that voters prefer a coalition and some sort of ETS in preference to a new resource tax and or an increase in super contrib's?

Turnbull supported the ETS but not the majority of the Party. They will look extremely silly if they now do a backflip and support an ETS, particularly as Turnbull lost his job because of it!

It's irritating that Mr Rudd is saying the Super contribution increase can only go ahead if the mining tax proceeds intact. If the Super contribution is being paid by all employers, surely they are funding it, not the miners alone.
I'm getting an increasing impression that Rudd himself doesn't actually know what he's supposed to be putting out there.

More likely that both parties are so hopeless that neither have the populations confidence that they can run the country.

Yes, I agree. Depressing, isn't it.

 

[Julia]

From "Business Spectator" today:

On the resources tax, BHP and to a lesser extent Rio Tinto are the backbone of Australian share portfolios. The government savaged them. Just as dangerous, they classified foreign investors as bad people and worthy of being hit hard. Foreign investors are going to be required for so many projects. They will now be much more wary and that nervousness will be multiplied by the fall on Wall Street.

So what we have is a world that is showing signs of stress at a time when Australia has moved into dangerous interest rate territory and has decided to decimate its own stock market by attacking foreign investors and its growth sector, resources. It's not smart.

 

[Whiskers]

From "Business Spectator" today:

Probably not smart in the short term, but maybe sometime down the track it may be necessary to avoid the world being run by corporations a-la another attempt at the 'East India Company' experiment.

Uncle Festivus started a thread re the bigger Macro economic environment and I postulated these possibilities there https://www.aussiestockforums.com/forums/showthread.php?p=552906#post552906

Off topic a little, but tax reform of the likes of Henry may be necessary to prevent the world from transforming from government rule to corporate rule.

There has been rule by Mititary, Kingdom, Dictator, Communism and Capitalism government... but apart from the limited 'East India Company' experiment, we've not had total corporate government... yet!

I suppose it depends on our level of self interest and relevant time span.

 

[JTLP]

In today's Herald Sun they have an article about the banks raising interest rates and KRudd calling them greedy for boosting there bottom lines even further. Hey Krudd...why not have a BSPT...after all they're being greedier then miners!

Also enjoyed the fact that he said that miners flactuate. Yes the markets are down re:Greece but the materials index was tumbling pretty fast on Monday when other mkts seemed not to bad.

Sigh.

 

[todster]

In today's Herald Sun they have an article about the banks raising interest rates and KRudd calling them greedy for boosting there bottom lines even further. Hey Krudd...why not have a BSPT...after all they're being greedier then miners!

Also enjoyed the fact that he said that miners flactuate. Yes the markets are down re:Greece but the materials index was tumbling pretty fast on Monday when other mkts seemed not to bad.

Sigh.

BHP & RIO were heading south before monday

 

[Bushman]

From "Business Spectator" today:

Australia's appaling saving rates (who needs to save when house prices rise on average 10% per year ) means that we are dependent on foreign investment!

Even our precious banking cartel is majority dependent on foreign funding sources.

This is the main reason that we keep running a shocking current account deficit despite our positive terms of trade.

So this demonising of foreign investors on one hand does not make sense if we keep running 'cup in hand' to net savers on the other.
The exodus from BHP/RIO will be explained by the required cost of capital increasing for foreign investors to compensate them for the increased sovereign and regulatory risk. This is the way that capital markets work.

I will repeat, it is just crazy (& xenophobic) populism this. If Krudd truely was cunning (not just a reactionary), then he would've taxed the banks and their risk-free 'super' profits rather than punishing a sector that genuinely drives producitvity in this nation.

 

[trainspotter]

From what I have been told the tax is to apply to extraction industries. This would include sand mining for glass production, crop fertilizers, even brick makers.

Lots to look forward to it would seem.

I heard on the news "Straight from Kevin Rudds mouth" that it is only to do with larger companies that are making a very large profit in the mining industry. ie BHP & Rio Tinto but I am not 100% sure ?

He definitely said that banks would not be placed in the cross hairs even though Westpac made a 2.88 billion dollar profit for 6 months to March 31st. PM Bung Chow Kluddy just labelled them "greedy" ... after all he should know !

 

[sails]

BHP & RIO were heading south before monday

IMO, most likely instos were selling in anticipation due to leaked info before Monday.

If you don't think it was the massive money grab by the govt, what other reasons do you think BHP & RIO fell over so rapidly at this precise time???

 

[Calliope]

For anybody who is really interested in what the Henry Tax Review was trying to do before Rudd got his grubby hands on it, read this link;

http://www.smh.com.au/opinion/polit...xactly-whats-best-for-them-20100504-u713.html

So let's ignore our appalling politicians and pay the Henry report the courtesy of considering what it has to say. Its key point is we need changing taxes for changing times. We're in the early part of a new century, our lives are changing, the position Australia finds itself in is changing, so how does our system of taxes need to change in response the major challenges we're likely to face over, say, the next 40 years?...