Mining Tax Grab - How will it pan out?

[Knobby22]

1. No.

2. Abbott is in trouble I reckon. Consensus is for sensible tax reform and a profit-based resources tax that is price-based. H/e, as Rudd found out, not at the expense of our sovereign risk.

Not to mention the awful terrain, lack of access to a port, no infrastructure.

 

[Apollo]

Err, i take it you are assuming that the small matter of the war raging in that region will be settled soon?

Look at Iraq. At war with itself and they have no trouble getting oil out of the country. Sure ther is the odd oil explosion but they wouldn't doit if they weren't making money out of it.

The US will secure it as best they can like they've done with the oil in Iraq.

US senators are saying maybe Afganistan can pay for the war in Afganistan now.

 

[Calliope]

True, also I would add that Abbott is looking forward to the many millions in election donations he can now expect from the mining companies.

Why? They don't need Abbott any more. They've got Gillard in their corner.

 

[drsmith]

They've got Gillard in their corner.

More like over a barrel full of ballott papers.

 

[blackjack]

any new tax is a bad tax

All this has to get past the greens in the senate

should be making it cheaper as theres plenty of competition out there to take OZ's place

Plus the big International Miners can start up shop in any other country as is happening now

Africa comes to mind. Cheaper costs more profit

Wake up Australia and use the Mc Donalds principle of keep em cheap and keep em coming

Who cares if they make you fatter

 

[Julia]

The Gillard government is the one in real diabolical trouble now.

The coal seam case comes under 40% new tax. Their goes the Qld vote.

Really? I wonder why Anna Bligh was sounding so delighted today then?

Err, i take it you are assuming that the small matter of the war raging in that region will be settled soon?

Yep, what I was thinking too.

Deal or no deal, the process itself must have left a sour taste in the mouths of the big 3 miners.
.

Perhaps, but I'd guess it's nothing like as sour as the taste in the collective mouths of the government considering their huge backdown.

More like over a barrel full of ballott papers.

Listening to Bob Brown on Radio National this morning, he's not a happy fellow and is threatening to "scrutinise it very carefully in the Senate".

So do some of you think it's still worthwhile Tony Abbott sticking to his "we will rescind it" theme? Are the big miners going to go for that after what they have now negotiated with the government?

 

[JTLP]

Does this mean that the plans shelved by Xstrata, Rio Tinto, CFE etc etc will be reopened and everything will be roses?

 

[drsmith]

Perhaps, but I'd guess it's nothing like as sour as the taste in the collective mouths of the government considering their huge backdown.

It's clear nothing tastes sour in their mouths after they put Kevin Rudd's prime ministership and their RSPT to the sword. Not even hair, flesh or blood.

They'll just be hoping the backflip is not too sour in the electorates mouth.

Listening to Bob Brown on Radio National this morning, he's not a happy fellow and is threatening to "scrutinise it very carefully in the Senate".

Sometimes I wonder if Bob Brown has fantasies about being Prime Minister.

So do some of you think it's still worthwhile Tony Abbott sticking to his "we will rescind it" theme? Are the big miners going to go for that after what they have now negotiated with the government?

For better or for worse, Tony Abbott is locked in now. As for the miners, no mineral resource rent tax is the best option of all.

 

[Apollo]

It's clear nothing tastes sour in their mouths after they put Kevin Rudd's prime ministership and their RSPT to the sword. Not even hair, flesh or blood.

They'll just be hoping the backflip is not too sour in the electorates mouth.


Sometimes I wonder if Bob Brown has fantasies about being Prime Minister.


For better or for worse, Tony Abbott is locked in now. As for the miners, no mineral resource rent tax is the best option of all.

WA government are threatning to take it to the high court.
The reason being is that the federal government can't do a rent type tax on minerals on shore. The federal government can only do rent type taxes off shore(eg 5km or more off the coast of Australia). Its in the constitution.
The states of Australia own the minerals not the federal government.

FMG also looking at challenging the tax in the courts.

What I can't believe is that the federal government seems unaware of the constitution which staggers me.

From reading info on the tax is that it effectively makes the super tax from 58% down to 40%. Wouldn't it make more sense to change the company tax to 40% for the miners. Then so pending court cases over rent taxes.

The smaller miners are not happy at all. They now have to pay all infrastucture costs.

This has been ill thought through all the way through.

 

[GumbyLearner]

WA government are threatning to take it to the high court.
The reason being is that the federal government can't do a rent type tax on minerals on shore. The federal government can only do rent type taxes off shore(eg 5km or more off the coast of Australia). Its in the constitution.
The states of Australia own the minerals not the federal government.

FMG also looking at challenging the tax in the courts.

What I can't believe is that the federal government seems unaware of the constitution which staggers me.

From reading info on the tax is that it effectively makes the super tax from 58% down to 40%. Wouldn't it make more sense to change the company tax to 40% for the miners. Then so pending court cases over rent taxes.

The smaller miners are not happy at all. They now have to pay all infrastucture costs.

This has been ill thought through all the way through.

This proposed law will be challenged no doubt!

 

[medicowallet]

From reading info on the tax is that it effectively makes the super tax from 58% down to 40%. Wouldn't it make more sense to change the company tax to 40% for the miners. Then so pending court cases over rent taxes.

But this would make it easy to administer, tie up loopholes, and would be fair.

NOT going to happen!

 

[Apollo]

But this would make it easy to administer, tie up loopholes, and would be fair.

NOT going to happen!

Why is it fair to tax a group 10% more than other companies.
The banks make billions of dollars and with government guantees and they are not forced to pay more tax. What about the mobile phone industry making billions or any other industry.

If they want to go after people for daring to take a risk and make bucket loads of money then why not tax their incomes of over $10 million a year.
Why hurt the little investors which have seen their share prices drop by quite a bit since this silly tax was announced.

Swan and co keep on saying the minerals belong to all Australians, when they clearly don't. They belong to each state. Swan and co simply don't understand the actual laws of the land.

By taxing the mining companies, many will fall. Many are in debt to the tune of many billions of dollars to the banks. They have to pay it back at a certain rate. This dumb tax effectively means that some will go broke. Its like putting up the interest rate by 10%. Not to many businesses can survive if that was to happen to them.

FMG for example has debts of over $3 billion dollars. Atlas Iron yet to even make a profit 5 years in. Many others like this. They go out and get finance to invest in their mining operations. Now they can't get that finance.

I really can't understand why the ALP are persisting with this tax.
They need to drop it ASAP.

The so called cosulting part was with 3 big companies mainly owned by companies in other countries while Aussie run mining companies were ignored. That won't go down well at all.

I can see a new round of anti super tax ads coming our way next week.

 

[sails]

Below are a few excerpts from an article in yesterday's Australian (the bold is mine).
Looks like the Labor govt had very little idea of how the mining tax actually worked.

…What we were especially amazed at was the level of sheer naivete and incompetence. The grasp of fundamental economics -- more specifically commercial reality -- was barely past what you learn in year 12 at high school.…

...The chief executives arrived at that day's negotiations with their finance teams, each two and three-strong. They expected to be shown Treasury's modelling, and arrived with their own internal numbers to demonstrate the impacts on the tax on a range of commodities. But Treasury "refused" the opportunity of show and tell. "It was an absolute farce...

…In the end the miners were not provided with Treasury's modelling until last Wednesday. These were the numbers that, according one insider, had come from "planet Mars"…

…”They had made it up and had no idea how to back it up. It was like sitting university professors down to lecture primary school students," one of the miners' advisers claimed yesterday…

Full article here: Treasury tarnished by turn of events over mining super tax

Yes, it takes a bit more than vibe to run a country - lol

 

[Julia]

Hello Sails, yes, I read that article which was pretty horrifying.

Not sure if it was that item or elsewhere in "The Weekend Australian" where Ken Henry comes in for a large whack of criticism. His position has, imo, been compromised for some time. It could well be time for a change in the position of Treasury Secretary.

 

[drsmith]

I read that article which was pretty horrifying.

And the clown that is wayne Swan has been made deputy PM.

A source present at the talks said Kloppers "took the lead" for the big three miners in telling Swan the "threshold issue" for a resolution was dealing with the tax's retrospectivity (that is, it applied to existing producing mines).

"He was taking the Treasury through the issues. And when he finished Swan looked up stoney-faced and said something like well, we have a real issue then," the insider says.

"At that point Marius indicated that the companies might be wasting their time and indicated they were prepared to leave the meeting. Ferguson led Swan out of the meeting. When they returned, Ferguson ran the rest of the meeting. If we had left at that point we would have gone public on the miserable quality of what had been a hostile discussion."

What did he think he was doing? Lecturing to children ?

 

[Julia]

Tony Abbott has been demanding the government release the modelling for both the RSPT and the new tax, claiming the figures are shonky.
Certainly the government has given away a lot in the negotiations and the suggestion that there is only 1.5 billion less coming to the government does sound unreasonable.

Further credence is given to his claim by Alan Kohler in "Business Spectator" today. The following is an extract:

Apparently we can cut the resource rent tax rate from 40 to 22.5 per cent, more than double the profit threshold above which it cuts in and reduce the number of companies being taxed from 2,500 to 320, and only lose one-eighth of the money.

Julia Gillard really is a prime minister who Gets Things Done – the Mary Poppins of tax policy, and the deal is supercalifragilisticexpialidocious. Just don’t ask too many questions.

The problem is that we are talking about listed companies that have an obligation to keep the market informed, under laws passed by the government.

Yet shareholders are now being kept in the dark by what appears to be a conspiracy of misinformation between the Gillard government and BHP Billiton, Rio Tinto and Xstrata.

If those three companies and the other listed firms now subject to the minerals resource rent tax are allowed to trade on the ASX this morning, it would be a disgrace. Investors are now entirely in the dark about what the new tax means for the value of their shares.

Mind you, they were in the dark about the impact of the resource super profits tax as well, which would have been completely unacceptable had the loss of value been caused by anyone other than the government.

The difference is that the companies themselves were not involved in the RSPT, but Friday’s announcement of a new taxing regime was the result of negotiations with BHP, Rio and Xstrata.

So they have a clear obligation to inform shareholders what they agreed to. And don’t tell us you don’t know.

After several days of negotiations, those companies would know exactly how much they will now be paying under the MRRT and exactly how it will affect their profits. The only reason they would have refrained from detailing this on Friday, as they are supposed to do under ASX listing rules, is to allow the government to spin the deal as only costing $1.5 billion.

But how can you still raise $10.5 billion from a tax that is clearly a shadow of its former self and apparently makes the miners happy? Most of them will no longer be taxed at all and those that are subject to the MRRT will only pay slightly more.

I think Resources Minister Martin Ferguson might have let the answer slip in his interview yesterday with Barrie Cassidy on the ABC's Insiders. He said: “I think the forward estimates we worked on are pretty solid because they represent an update in interprets (sic) of commodity prices.”

It looks like the government has raised its forecasts for commodity prices, just as the world appears to be tipping over into another recession. But as Martin Ferguson said yesterday: “When you think about it, iron ore's gone up over 400 per cent over the last decade, coal 200 per cent. That's why we actually confined it back to the three key commodities that are absolute high demand.”

In other words, it seems the government restricted the resources rent tax to iron ore, coal and energy not to let 2,180 companies off the hook, but to focus it on the most profitable commodities. At least that’s what the minister seems to be hinting at.

My colleague Robert Gottliebsen did some more digging into this over the weekend and came up with some fascinating answers along similar lines. (See Digging deeper on the MRRT, July 5.)

But while this sort of smoke and mirrors might be acceptable for political spin, it is completely unacceptable for listed companies.

 

[Calliope]

And the clown that is wayne Swan has been made deputy PM.
What did he think he was doing? Lecturing to children ?

Swan never had much credibility. Now he has none. If Gillard is smart she will replace him if she is re-elected.

The problem is with whom? Tanner is going and I don't think Craig Emerson is Treasurer material. He was in the Rudd camp until the end, mainly because he wasn't told which way the wind was blowing, and I don't think that the fact that he used to shack up with Gillard will cut any ice with her.

 

[Calliope]

Anyone who believes that the hard-nosed mining bosses, who had Gillard on her knees, would settle for a tax that only reduced the grab by 20%, would be away with the fairies.

Swan, who knows the truth, is a liar. Gillard has no concept of the way that business operates. She is an economic ignoramus. Her management of the BER revealed her shortcomings. The building contractors took her for a ride ripping off billions 0f taxpayers dollars.

 

[Mofra]

Does this mean that the plans shelved by Xstrata, Rio Tinto, CFE etc etc will be reopened and everything will be roses?

XStrata have already stated they will proceed with the previous expansion plans that were "put on hold".

The 40% level did in fact effect the lending parameters of some of the bigger projects.

 

[Mofra]

More on the Projects:

http://www.news.com.au/business/wit...-a-rosier-future/story-e6frfm1i-1225888736064

With super-profits tax dead, miners turn their eyes to a rosier future

A WAVE of optimism is sweeping the mining sector after the axing of the resource super-profits tax.

Rio Tinto and Xstrata are moving to revive plans to spend billions of dollars on projects in Western Australia and Queensland.

Rio Tinto said it would restart a feasibility study into a planned $12 billion expansion of its Pilbara iron ore operations.

And Xstrata announced it would resume work on its $6bn Wandoan coalmine in Queensland.