Mining Tax Grab - How will it pan out?

[todster]

LOL@todster .. have a look as to how much was wiped off the share price of BHP & Rio Tinto. Yeppers all in one week. The superannuants that own shares in these bastions will be letting Mr Rudd know all about it directly.

If you did some research todster you will already notice that what I have written "hypothetically for comedy purposes only" has alrady been reported in the media from several mining sources and in fact has started to take place. Watch this space comrade.

Thanks Whiskers. Maybe this is what governments in future need to do. Consult a little more with the respective parties prior to implementing measures to cripple the particular industry. But then again when they did get the advice (Insualtion & BER) they chose to ignore it. Ho hum. Bureaucracy at it's best.

Yeppers look how much RIO&BHP clawed back in one day
Funny old game innit

 

[trainspotter]

Yeppers look how much RIO&BHP clawed back in one day
Funny old game innit

Still a loooooooong way to go my friend. Nowhere near their tops a week ago. Could be a dead cat bounce? A European rescue package from the IMF that the UK refuses to underwrite causes Rio up 5.8% and BHP 4% in one day is out there ! Bargains to be had when the blood runs in the street apaprently.

Interesting to note the volume for Rio was steady with a mean average around the 6.5 million mark for the week? Meanwhile BHP went from 18 million to nearly 30 million for the same period.

 

[todster]

Still a loooooooong way to go my friend. Nowhere near their tops a week ago. Could be a dead cat bounce? A European rescue package from the IMF that the UK refuses to underwrite causes Rio up 5.8% and BHP 4% in one day is out there ! Bargains to be had when the blood runs in the street apaprently.

Interesting to note the volume for Rio was steady with a mean average around the 6.5 million mark for the week? Meanwhile BHP went from 18 million to nearly 30 million for the same period.

No where near there tops a week ago?
A week being 7 days?

 

[Whiskers]

Still a loooooooong way to go my friend. Nowhere near their tops a week ago. Could be a dead cat bounce?

Off topic a bit, BUT I don't know if you've noticed decent rises in base metals in the last few hours, about 4% rise in copper, not to mention the FTSE and Europe up 5%, US futures up and good, lower loan default news in the US etc.

This'll be one hell of a dead cat bounce.

Somehow I'm thinking our mining industry will purrrrr on nicely, without missing a beat. :

 

[Julia]

Whiskers, (with apologies to all for diverting the thread), Voltaire a pretty long time ago wrote a short novel called "Candide".

The protagonist is a Dr. Pangloss, a professor if I recall correctly.
Dr. Pangloss had the remarkable facility of always considering that everything was always for the best in the best of all possible worlds.

I'm just thinking you would have something in common with this famous literary figure.

 

[Whiskers]

Whiskers, (with apologies to all for diverting the thread), Voltaire a pretty long time ago wrote a short novel called "Candide".

The protagonist is a Dr. Pangloss, a professor if I recall correctly.
Dr. Pangloss had the remarkable facility of always considering that everything was always for the best in the best of all possible worlds.

I'm just thinking you would have something in common with this famous literary figure.

Nah, not necessairly for the best... BUT, inescapably... Que Sera, Sera (Whatever Will Be Will Be)... so in that sense, it's best to be at least a bit pragmatic and just get on making the best you can with what you are dealt.

Some wise old person taught me to pick your fights carefully, and... t'is wise to not waste your energy and time fighting to change what you cannot change.

Don't always get it right, but I think I do more often than not.

 

[trainspotter]

Mining companies will sabre rattle about loss of jobs, exploration cancelled, overseas projects looking more attractive yadda yadda yadda. Government will demonise them and call them greedy and foreigners to gain popular opinion with the public. Government will get 40% through senate to fund budget black holes. Mining companies will continue on their merry way but will peel back peripheral exploration opportunities and shed staff and sponsorship. Government will come out and say I told you so. We continue to live in Utopia and be brainwashed. Case closed.

 

[trainspotter]

Yeppers look how much RIO&BHP clawed back in one day
Funny old game innit

Look how much they lost today. Nope ... no bounce there ! Really purrrrrring along.

Funny old game innit !

 

[satanoperca]

Government will get 40% through senate to fund budget black holes.

Why are you convinced that they will be able to get it through given the ETS failed and the Libs have already stated that they will not support the bill?

And why stop with resources, the banks make huge profits so why not tax them more? Actually might as well include any small/medium or large business that make more than govnuts bonds yield on the capital invested?

Most importantly why would anyone trust a govnut that cannot even roll out something as simple as home insulation? Are that right, the public don't anymore.

Cheers

 

[trainspotter]

Why are you convinced that they will be able to get it through given the ETS failed and the Libs have already stated that they will not support the bill?

And why stop with resources, the banks make huge profits so why not tax them more? Actually might as well include any small/medium or large business that make more than govnuts bonds yield on the capital invested?

Most importantly why would anyone trust a govnut that cannot even roll out something as simple as home insulation? Are that right, the public don't anymore.

Cheers

I believe the Greens are confident of doing a deal with Ruddmeister to get the tax through as long as they get their way on a carbon tax. You scratch my back and I will scratch your green skin kinda thingy.

EXACTLY ! What is next? Why not increase tax to a 40% threshold on large corporations that make billions in profit like Telstra and Westpac and such like naughty big companies employing all those people and paying the tax required under the ATO law.

Trust this Government? I trust them to stuff it up and blame everyone else. Not our fault we don't have an ETS cause the Libs stopped it. blah blah bloody blah. We didn't stop the Child Care Centres it was due to lack of demand (a week before Gillard was on TV saying they were still proceeding) ....... aaaaaaaaaaahhh I give up. Utopia man ....... more spin to dumb down a Nation.

 

[Aston]

Just saw an interesting article stating that Mining companies will be effectively paying a tax rate of 57 per cent after the 28 per cent company tax rate is added less depreciation. A tax on a tax. Resource companies take on so much operational and financial risk to explore, develop and produce a mine that may one day be cash flow positive, so I think this seems a bit unfair. I feel for the hard working Australian mining families who are faced with uncertainty because of such a proposed change. I will be writing to Mr Swan objecting to the tax but I doubt he will listen to me.

http://www.smh.com.au/business/the-resource-super-profits-tax--what-is-it-20100511-usnu.html

 

[lil smoochie]

what we need is a realistic forecast and a realistic budget!

they cut tax by a bit, they increase super, they want to get out of debt

solution? lets tax mining companies

then what happens?

mining companies move overseas, australia loses jobs and income.
government wont be able to sustain super increase and tax increase. then we get into more debt.

They come up with so many solutions that depends on many other factors going well and when one factor doesnt do well the whole thing falls down

when they announced Australia was doing well compared to rest of world they forgot to mention cause of the HIGH TAX RATES! money for them to push around

 

[drsmith]

The worst thing about the RRT is that it's become a public negotiation between miners and the government.

The outcome will therefore be determined morey by public opinion than it otherwise should. Not a good way to reach a sound policy position given the complexities involved.

 

[springhill]

I don't have the financial education, knowledge or background to analyse this tax. In my humble opinion if you attack our miners you attack our ability to earn on the ASX (at our own risk of course), but you also f**k with peoples' super, which is all that some people have. Not only that, miners are a part of our social fabric, not just our financial equation. Mining aka 'hard yakka' still has a place in our Aussie society, and employs the everyday man/woman.
You f**k with that and you f**k with Joe Public.
Rudd is a tosser IMO always has been, finally people are waking up, after preferences its split Liberal/Labour 50/50.
THIS IS THE ELECTION LOSING POLICY WE HAD TO HAVE! GAME OVER RUDD!

 

[trainspotter]

"You can't expect your best athelete to run the race with a ball and chain around their legs" ........ Joe Hockey in response to Kerry O'Brien on Lateline in regards to the 40% tax on mining. Hmmmmmmmm ... makes sense doesn't it? *knod head slowly*

 

[brty]

I am pretty sure that our treasurer attends meetings regularly with other finance ministers from around the world and I'm sure he talks with others while there. All governments like new taxes, especially those with budget deficits.

I have a suspicion that other countries will follow with this type of tax on resources, and the mining giants know it. The world is heading towards 'peak resources', prices will rise, and governments want a larger cut.

brty

 

[Julia]

"You can't expect your best athelete to run the race with a ball and chain around their legs" ........ Joe Hockey in response to Kerry O'Brien on Lateline in regards to the 40% tax on mining. Hmmmmmmmm ... makes sense doesn't it? *knod head slowly*

I caught the latter part of the Hockey interview (and it was the 7.30 Report, TS, not Lateline) and was pleasantly surprised at the clarity and quality of his responses to K. O'Brien. I wonder if the kick in the polls might be giving the Libs the push they need to really start performing?

 

[So_Cynical]

I am pretty sure that our treasurer attends meetings regularly with other finance ministers from around the world and I'm sure he talks with others while there. All governments like new taxes, especially those with budget deficits.

I have a suspicion that other countries will follow with this type of tax on resources, and the mining giants know it. The world is heading towards 'peak resources', prices will rise, and governments want a larger cut.

brty

Yep that's what im thinking, China, South Africa, Ghana, Brazil, Canada and the US to follow suit...they can all use the money and the resulting inflation.

 

[Whiskers]

Just saw an interesting article stating that Mining companies will be effectively paying a tax rate of 57 per cent after the 28 per cent company tax rate is added less depreciation. A tax on a tax. Resource companies take on so much operational and financial risk to explore, develop and produce a mine that may one day be cash flow positive, so I think this seems a bit unfair. I feel for the hard working Australian mining families who are faced with uncertainty because of such a proposed change. I will be writing to Mr Swan objecting to the tax but I doubt he will listen to me.

http://www.smh.com.au/business/the-resource-super-profits-tax--what-is-it-20100511-usnu.html

Aston, have a look at post #57 and the article from David Buckingham who is a former head of the Minerals Council. The interesting thing about how he works the figures is that the tax rate will now start lower than before and increase as profitability increases, whereas previously it was the reverse.

Note that conglomerates with deep pockets have a ROR advantage over smaller Aus operators because they can fund larger projects up front to get better economies of scale, arguably discrimination in the tax system.

Also note the mining industry gets very generous concessions compared to other industries.

I am pretty sure that our treasurer attends meetings regularly with other finance ministers from around the world and I'm sure he talks with others while there. All governments like new taxes, especially those with budget deficits.

I have a suspicion that other countries will follow with this type of tax on resources, and the mining giants know it. The world is heading towards 'peak resources', prices will rise, and governments want a larger cut.

brty

Yep that's what im thinking, China, South Africa, Ghana, Brazil, Canada and the US to follow suit...they can all use the money and the resulting inflation.

I concur. This is a significant and important prediction, also because as I mentioned earlier, all our mineral competitors have much more debt than us. We can get away with being first because of the cost saving from being much closer to the main mineral markets.

 

[Mofra]

I have a suspicion that other countries will follow with this type of tax on resources, and the mining giants know it. The world is heading towards 'peak resources', prices will rise, and governments want a larger cut.

Not sure that is quite the case in the near future - plenty of "unprofitable" projects currently in mothballs will be started if there is a prolonged increase in resource prices (the simple concept of supply and demand still holding on strong if you will).

I have a suspicion that other countries will follow with this type of tax on resources, and the mining giants know it. The world is heading towards 'peak resources', prices will rise, and governments want a larger cut.

We can only hope so to protect the competitiveness of the Australian market. I dare say (following the South American experience) these nations would be more inclined to tax the foreign companies first before hitting the domestic companies, which is again bad news for BHP & RIO.