Think tank uses fake figures to calculate mining sector tax

We received a disgruntled phone call followed by two grumpy emails (one of which is at the bottom of this story) from a Mr Roderick Campbell of Manuka, ACT, after exposing TAI’s fake claim that the mining industry paid just 15 per cent corporate tax on a $498 billion profit the last ten years.

As I pointed out in my column for The Australian on Tuesday, when you stop making up the figures and look at actual profits and actual tax paid, it shows the mining industry actually paid a little less 30 per cent in company tax.

And the Institute claimed the mining industry had made a $498 billion profit in the last ten years. The real figure is $353 billion. But what’s the odd $145 billion between friends?

Campbell, the TAI’s research director, doesn’t dispute the 30 per cent figure (29.3 percent, to be precise) – even though it is twice the figure claimed by his colleague David Richardson in this letter to the Australian Financial Review in January:

AFRLetter

Error One: TAI took a wild guess at how much corporate tax the mining industry had paid. They took the total mining tax take, included royalties for the last 11 years – $185 billion – and made the brave assumption that only 41 per cent of that – or $76 billion – was corporate tax.

Error Two: The fanciful figure of $76 billion was based on data for 11 years, not ten. TAI seemed to think that didn’t matter and called it a ten-year figure anyway.

Error Three: They used the wrong ABS table to identify mining profits from 2006 – 2016. TAI took the profit for the entire resource sector – oil, gas, exploration and support services included – to arrive at a ten year profit of $498 billion. The figure they should have used, 10 year profits mining alone, without oil and gas, is $353 billion.

Error Four: There was no need to calculate an “assumed” figure. The actual figure for corporate tax payments – $103 billion, not $76 billion – was staring them in the face. It appeared in the January Deloitte report they used for other figures.

Summary: For the benefit of Richard Denniss and his crew we’ll take them through that again.

  • Actual profit for 2006-16: $353 billion
  • TAI’s fake figures: $498 billion
  • Actual corporate tax payments: $103 billion
  • TAI’s stab-in-the-dark figure: $76 billion
  • Actual rate of corporate tax paid: 29.3 per cent
  • TAI’s fake rate: 15 per cent

If we had time, we’d also explain to the Institute the difference between a before-tax profit with inventory changes, and one without. But that’s a rounding error compared to their wild misstatement of the Mining Industry’s tax payments.

Conclusion: The Australian Institute cannot be trusted in this, or any other, debate.

Email from TAI research director Roderick Campbell:

AIemail

 

 

Nick Cater is the executive director of the Menzies Research Centre. The Menzies Research Centre fights for policies that enable business to flourish in Australia, and for Australians to enjoy the rewards of liberty and hard work. Please consider helping us by becoming a highly valued subscriber.

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17 Responses to Think tank uses fake figures to calculate mining sector tax

  1. Bruce of Newcastle

    I made a bet with myself when I read Nick’s headline that I’d know which “think tank” it would be.
    I won! 😀

    Fairfax’s speed-dial button to Denniss must be worn down to a nub by now.

  2. classical_hero

    Talk about the economically illiterate. Shame too many are in control of the finances of the country.

  3. Rococo Liberal

    Tax equals [30% of (Assessable income minus deductions)] -rebates
    It’s not that hard even for a lef wing economist to understand
    But is seems that out lefty friends have this strange habit of thinking that accounting profit and taxable income are the same.

  4. H B Bear

    Please, The Ponds Institute is Australia’s leading independent think tank and consequently a go-to source for Australia’s most trusted news sources, the ALPBC. If only Catallaxy carried more posts from say, Chief Economics Correspondent Emma Alberscreechi, so we could learn more about blood sucking vampire squids and shit.

  5. H B Bear

    The Ponds Institute bullet points are as whacky as their thinking.

  6. struth

    These are the sort of pricks that can somehow work out that abolishing negative gearing would decrease rents!!!!

  7. Tom

    Conclusion: The Australian Institute cannot be trusted in this, or any other, debate.

    This is so unfair as it overlooks the many years spent by the Ponds Institute’s staff of former Greens Party spruikers in doctoring research and rigging push-polls.

  8. Anto

    From the Emma Alberici school of areethma…arithmath….adding stuff up.

  9. RobK

    Royalties should never be conflated with taxes. They are the value of the resource the crown has been able to bring to market via its lease agents.

  10. Motelier

    Will someone teach these xspurts to read a balance sheet.

  11. EvilElvis

    Any taxpayer funds to the institute should have their economics applied to it. All taxpayer funds cut plus 30% of whatever contributions received otherwise returned to the government. After all, it’s all government money isn’t it? Think of the ‘savings’.

  12. EvilElvis

    FMD Roderick, “er, um, where do these figures come from?”… You can lead a horse to water, but you can’t make it drink…

  13. JohnA

    Rococo Liberal #2643796, posted on February 23, 2018, at 9:34 am

    1. Tax equals [30% of (Assessable income minus deductions)] -rebates
    2. It’s not that hard even for a left wing economist to understand
    3. But it seems that our lefty friends have this strange habit of thinking that accounting profit and taxable income are the same.

    Statement 3 refutes Statement 2

  14. W Hogg

    So the issue is that miners are alleged to pay 15% out of total taxes and royalties of 51>?

    Assume royalties are raised to equal 100% of gross profit. Then 100% of pre tax and royalty profits would be consumed, the taxable income would be nil, income tax nil, total tax and royalty rate 100%, and “effective corporate tax rate” 0%. What am I missing?

  15. OneWorldGovernment

    Go Nick Cater.

    Well said.

  16. Aussieute

    Another example of where it’s usually futile to try to discuss facts and analysis with people who are enjoying a sense of moral superiority in their ignorance when t doesn’t align with their agenda.

  17. Tel

    Royalties should never be conflated with taxes. They are the value of the resource the crown has been able to bring to market via its lease agents.

    No. Unfortunately, the Commonwealth has a system of redistribution so that a state pulling in large royalties (like WA) ends up getting ripped in the GST distribution. As a consequence the price of the royalties is badly distorted, generally a lot lower than what the same state would charge if there was no Commonwealth.

Comments are closed.