The government are having to explain their Clayton’s Tax – the tax you have that raises no revenue. It must be some sort of record; a tax that raises zero, as opposed to little, revenue. So what is the spin?
Regional Australia Minister Simon Crean said the tax was never expected to bring in revenue during periods of heavy investment in the sector.
“It is a profits based tax. In other words, it is only paid when a certain profit level is reached,” Mr Crean told the Nine Network.
“The other factor about this tax was that it was never projected to raise it in the early part, it’s later that it raises it. Why won’t it raise it in the early part? Because these mining companies are making massive investments in infrastructure, which (are) tax deductible.
“So arguing that this is a failure based on the first three months is just ludicrous.”
In isolation that isn’t a bad story. But … Today is Thursday, just last Monday (like three days ago) the government released their MYEFO including expected MRRT revenue (pg. 305) …
Net revenue from the MRRT is expected to be $2.0 billion in 2012-13, $2.4 billion in 2013-14, $2.1 billion in 2014-15 and $2.6 billion in 2015-16, which represent the net impact on revenue across several different heads of revenue. These include the offsetting reductions in company tax (through deductibility) and interactions with other taxes.
… and expected business investment (pg. 14).
Recent falls in global commodity prices have led to some scaling back of investment plans in the coal and iron ore sectors. Still, resources investment is expected to reach unprecedented levels, driving new business investment to record highs as a share of GDP over the forecast period.
Simon Crean tells us that the tax isn’t supposed to raise much revenue when investment is high while the MYEFO tells us it will net $9.1 billion over four years despite resources investment being at unprecedented levels.
This is the same vein as yesterday’s failed corporate tax cut talks. Nobody could agree on revenue neutral tax cuts. This government is just about appearances- we make it look like we are taxing the miners to get the share of wealth for the people. And we try to make it look like we are giving corporate tax cuts. Neither to be actual.
Biota
25 Oct 12 at 11:35 am
Hmmm…who would have thought that a tax that raises little revenue might perform so badly because it is inefficient. Flaying peasants for poor performance instead of routinely flogging them and robbing them as they leave the manor.
.
25 Oct 12 at 11:45 am
Like
stackja
25 Oct 12 at 11:51 am
…and to think how things could be different in terms of infrastructure for Australia..listen to the interview
EJ
25 Oct 12 at 12:39 pm
Not only has the MRRT not raised any money, but in fact has cost the government, I should say us taxpayers, millions of dollars.
Remember one of the conditions of this tax would be that any Loyalty tax increases by the State government would be compensated by the federal government! You know, the Loyalty increases that the WA, QLD & NSW governments have imposed already.
So in fact the mining companies have made a profit at the expense of us taxpayers!! ARRGGHH ^@#&#$&**^&*GHJK&*%^&^
Maurice
25 Oct 12 at 12:43 pm
The opposition needs to hammer this during QT.
Is the member for Hotham calling the member for Lilley a liar?
2dogs
25 Oct 12 at 12:48 pm
What happened to the BS story in the Australian that “BHP Billiton and Rio Tinto will be the only resource companies making payments of the new mining tax when the first instalment falls due on Monday, and they will be doing so out of a sense of obligation because of their role in designing the tax. ”
Let me guess, the Oz made it up.
SteveC
25 Oct 12 at 1:13 pm
“What happened to the BS story in the Australian”
I imagine Nasser read it and gave Kloppers a nasty talking to. He isn’t into gestures for their own sake.
Rio situation probably not too different.
2dogs
25 Oct 12 at 1:29 pm
Swan falling apart:
Wayne Swan blunders in mining tax defence.
The country’s in the very best of hands.
C.L.
25 Oct 12 at 1:30 pm
So SteveC, you think firms don’t pay taxes early as a form of protection money? What about the liquor producers paying Rudd’s tax which was challenged?
The only person making up figures is Wayne “nine equals two” Swan.
.
25 Oct 12 at 1:36 pm
Picked up that spin by Crean (hey, it rhymes!) too. The question was not why was there no tax paid when the miners made so much money (which is what Crean seemed to be answering), but rather why was there no tax paid when you claimed there would be tax paid.
roger
25 Oct 12 at 1:37 pm
In the meantime the Labor party continues to piss Australian Taxpayers Money up against the Wall
Foreign Minister Bob Carr’s wife Helena has cost taxpayers $120,000 in six months on overseas trips
“The arrangement is highly unusual for a foreign minister. AAP understands Senator Carr’s Labor predecessors Stephen Smith and Kevin Rudd rarely if ever took their wives on official overseas trips.
The total cost of Senator Carr’s nine trips was an estimated $828,754, the documents obtained by AAP show.
Of that, Mrs Carr’s airfares – the vast majority of which were business class – accounted for an estimated $123,928. Her meals and incidentals cost a further estimated $8000.”
“The only trip listed in the documents that Mrs Carr did not go on was a 24-hour visit her husband made to Fiji – at a steep cost of more than $42,000.
For that trip, Senator Carr took a special purpose aircraft at a cost of about $35,000 rather than fly commercially.
Senator Carr’s spokesman said he opted for the private plane because he had to be back in Canberra for pre-budget cabinet meetings and commercial schedules were not suitable.
Overall, Senator Carr is spending more days abroad than Kevin Rudd, who was sometimes called Kevin 747.”
http://www.dailytelegraph.com.au/news/national/foreign-minister-bob-carrs-wife-helena-has-cost-taxpayers-120000-in-six-months-on-overseas-trips/story-fndo2j43-1226503109455
OldOzzie
25 Oct 12 at 1:54 pm
dot, you seem to have missed the point, again. The Oz claimed two companies would pay MRRT instalments, even though they didn’t have to. I called that BS at the time, and have been proved correct. Clearly the Oz just made it up (or have very dodgy “sources”)
SteveC
25 Oct 12 at 2:07 pm
“I called BS on it and it is unfalsifiable”
Chump
.
25 Oct 12 at 2:08 pm
Did you take extra stupid pills today dot?
BHP Billiton and Rio Tinto will be the only resource companies making payments of the new mining tax when the first instalment falls due on Monday, and they will be doing so out of a sense of obligation because of their role in designing the tax.
Did the two named companies make a payment? No
Was the Oz statement incorrect? Yes
SteveC
25 Oct 12 at 2:14 pm
The country’s in the very best of hands…
I think this helps explain why Simon Crean is the ball carrier rather than the Minister for Finance, or the [ahem] Worlds’ Greatest Treasurer.
Dr Faustus
25 Oct 12 at 4:14 pm
We know that the mining tax has not raised one cent in revenue but do we know if any mining company has put in a claim for losses during this period?
Splatacrobat
26 Oct 12 at 12:05 am
Splat, they don’t “put in a claim for losses”, they just carry forward the loss into the next period. It seems reasonable to assume the reason there was no instalment this period was because of losses carried forward (including credits for state royalties)
SteveC
26 Oct 12 at 9:43 am
You’re just making stuff up as you go along. Like I said before.
.
26 Oct 12 at 9:51 am
Go for your life dot, it’s all here:
http://www.ato.gov.au/businesses/pathway.aspx?sid=42&pc=001/003/134&alias=mrrt
SteveC
26 Oct 12 at 9:53 am
Right? So it’s a Brown tax or isn’t it?
.
26 Oct 12 at 11:04 am
SteveC,
If the mining companies have reason to suspect that the tax will be withdrawn any time soon all they will need to do is keep investing, or using any of the other allowances under the tax, enough to get their liability under the threshold each period until the tax is withdrawn.
This one could almost not have been designed to be more easily, and legally, evadable if they had tried. Given the massively complex structure, the almost complete lack of mining experience of the ATO and the vastly better experience the companies have on their cost structures I will be surprised if this tax yields much, if anything, before the next election.
From the mining companies’ point of view the more they embarrass the Treasurer the better.
Fortunately for the rest of us this is not difficult.
Andrew Reynolds
26 Oct 12 at 3:37 pm
I model this kind of stuff, and it is fantasy that the tax was going to bring in revenue in the initial years of operation. Each mine was allowed to undertake a valuation, at market, and deduct this value progressively from any potential MRRT liability, grossed up at 22% per annum.
So (in simplified terms) if a mine was valued at $10Bn in Year1, and there was a $1Bn MRRT liability in Year1, the mine would be left with an MRRT credit of $9Bn, which would then be grossed up by 22% for the following year. So, in Year2, the credit would be worth $10.98Bn. So on and so forth. Royalties are also accrued as credits and grossed up each year.
Swannies union buddies are also partly to blame, since union wage claims have dramatically decreased the profitability of the industry, and this is a tax on profits after all. The CFMEU just got 22% over 3 years at BMA mines in Qld.
I get the very real impression that Labor has no clue how the tax that they promulgated actually works. It would be painfully obvious to anyone reading the explanatory memorandum that the people who wrote it are inner city lawyer-types with no understanding of the industry whatever. They probably visited a mine once in a tour bus with their shiny hardhats, shiny leather boots, and fluro vests.
A
29 Oct 12 at 12:50 am