The government is introducing legislation to repeal the mining tax. Good.
“The repeal of the MRRT package contributes more than $13 billion of savings to the budget’s bottom line on an underlying cash basis over the forward estimates,” Mr Hockey said.
He said the MRRT was a “complex and unnecessary tax” that struggled to raise any money, while imposing significant compliance costs on business.
The mining tax was first proposed by the Henry Review and eventually introduced in a very bastardised form after a huge tax debate. Anyway, the long and the short of it was that mining was earning resource rents and that those rents could be taxed with impunity. So what has happened since?
I grabbed some data from the ABS (ABS Cat. 5676.0 (Tables 6 and 9)) and calculated the Profit before Income Tax to Sales ratio for mining over the last 13 years or so and marked the point where the mining tax was proposed.
Looks like the mining tax was first proposed (nearly) at the top of the cycle. It’s been mostly down-hill since then.