…from the quill of Antisthenes the Younger
When the Federal Labor Government came up the idea of the Resources Super Profit Tax (RSPT), most of the media had been at pains to imply that the mining companies hitherto pay only negligible tax and thus the proposed Rudd-Gillard’s scheme would be fair. The experts in one of Labor’s so called think tanks worked out that if the pre-tax profit of mining companies was equally divided amongst the Australian population, everybody would get about $5,000. Imagine that! What could be fairer? I’m not making it up – The Australian Institute – Mining the truth.
The RSPT was to be levied at 40% and applied to all extractive industry including gold, nickel and uranium mining as well as sand and quarrying activities. It would please the Greens and other Marxists-in-heart. However the mining companies did not like the idea too much and launched an advertising campaign attempting to explain the inanities of RSPT to the general public. It frightened the Labor apparatchiks enough to acquiesce to the Gillard’s coup; Rudd was removed and the tax renamed Mineral Resources Rent Tax (MRRT). That applies to coal and iron ore only and is levied at nominal 30% (extraction allowance reduces it to 22.5%).
This new scheme was the result of a meeting on 1st July, 2010 between the then Prime Minister Julia Gillard, the then Treasurer Wayne Swan and the then Resources Minister Martin Fergusson, nominally representing Australians, on the one side; and the representatives of BHP Billiton, Rio Tinto and Xstrata, presumably representing the mining industry, on the other side. The Treasury officials were excluded. According to the Labor propaganda at the time, again mostly mindlessly repeated by the main stream media, that was supposed to raise $22.5 billion. About a month ago this forecast was slightly reduced to $4 billion.
Now, after one year of application of the tax, the Australian Taxation Office had to refund to Rio Tinto the pre-payments it had made. It is highly likely that other mining companies will be receiving their refunds soon. Thus the Rudd/Gillard idea just frightened the possible new mining investment away, and so the greenies won anyway. The possible incompetence of the Federal Labor government in negotiating that taxation scheme was even discused in that extreme Left tabloid, The Age -How Canberra got diddled. Nevertheless, it is worth reading.
If something like that happened in a third world country, The Economist would darkly hint at the corruption at the highest levels, and wonder which minister purchased a new Mercedes or a new house. Luckily, we are not a third world country…