How much tax do miners pay?

Yesterday on Twitter Rob Oakeshott asked the question:

mining tax - oakeshott 1

Australian miners do not pay 13% – 18% as an effective tax rate. In an analysis published last year by the MCA I calculated the effective tax rate miners pay.

mining tax - oakeshott 2

If you add State royalties on top of that (as the Henry Review implied we should) that number jumps up to over 40 per cent.

So where does the 13% – 18% figure come from? Well it is from a misunderstood econometric analysis first published by the NBER and quoted by the Henry Review. We covered that incident in May 2010. I subsequently wrote it up in an op-ed at The Age.

Last Sunday Treasurer Wayne Swan put out an Economic Note making the argument ”that mining companies in Australia get a big discount on the company tax they pay because of very generous tax concessions they get at the expense of Australian taxpayers”.
As evidence, Swan quotes an academic working paper published last year by the US think tank, the National Bureau of Economic Research. The Henry review also quoted that paper.
This argument shows a fundamental lack of judgment on Swan’s part and raises the question as to what exactly the public got for the $10 million the Henry review cost to produce. The paper, written by PhD student Kevin Markle and his professor Douglas Shackelford, is an econometric examination of the relative tax burdens of domestic and multinational corporations.
They calculate effective tax rates and then strip out size and country and industry effects (and time effects) to examine whether different types of companies face different effective tax rates.
While it is a very good paper, Markle and Shackelford never intended to support the argument that the Henry review or Swan is attempting. This paper has been quoted inappropriately and out of context. What is extremely concerning is that Treasury and Swan’s advisers don’t know that context, or don’t care about the context. Either way, through ignorance or indifference, the Rudd government is attempting to introduce a tax based on an argument that is demonstrably wrong.

Even the authors of the paper agreed the government and Treasury had got it wrong.

So the 13% – 18% effective tax rate figure is a furphy.

But then we get this:

mining tax - oakeshott 3
and this:

mining tax - oakeshott 4

Small business tends to pay a lower effective tax rate than do large businesses. This graph from a paper I wrote joint with Richard Heaney ($) (Cat discussion here):

mining tax - oakeshott 5

Now that doesn’t mean that all large businesses are paying tax at the moment – some new large miners are not paying tax right now due to depreciation write-offs and the like. But that doesn’t mean that they won’t pay tax – and lots of it – in future. The point it that large business tends to pay higher rates of effective tax than do smaller businesses (despite our corporate tax system being advertised as being a flat tax system).

Update: In comments brc asked the question:

Well I’m interested to see if Oakeshott is really interested in the data or just trying to find a line to spin.

In answer to that question Rob Oakeshott has tweeted this post to his 14,734 followers – so he is interested in the data.

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157 Responses to How much tax do miners pay?

  1. Makka says:

    The other point is that Oakshyte has no clue what taxes businesses (large, small, mining etc) are paying. Predictable.

  2. JamesK says:

    Csnnot wait to see the nback of the superannuated twit Oakshitt.

    I still bet he won’t contest his seat at the next election.

    And the deal was done 3 years ago [ his future is certain.

    That or he really is a thick as two short planks.

  3. Louis Hissink says:

    And you need to wonder where they gain the impression we are also making super profits during the commodity booms; probably the same source that asserts we are only paying an effective tax rate of 13%-28%.

  4. H B Bear says:

    Bit late to be asking the question.

    Oakeshott should be using these non-parliamentary weeks to road test lawn mowers and find a good box trailer anyway.

  5. brc says:

    Well I’m interested to see if Oakeshott is really interested in the data or just trying to find a line to spin.

    There is no question – his support for the Labor government and hence the mining tax has left the mining industry worse off (see the diversion of investment pipeline away from Australia to other countries) yet has left the fiscal position worse now (due to the expense of collecting the tax with no real revenue) and worse in the future (due to a lower amount of mining leading to a lower amount of future taxes and royalties). So making the future worse, and the present worse, for zero political gain. You couldn’t have designed a worse policy if you actually tried.

    I think Oakeshott is scratching, scrambling for an excuse for his monumentally bad decision, a decision that was made for his personal vanity and had nothing to do with his constituents or the best path forwards for Australia.

  6. Nuke Gray says:

    Too much! EVERYONE pays too much tax!. The only good tax is a dead one!

  7. Rabz says:

    Who is right?

    FFS, I am looking forward to seeing the back of this inveterate imbecile.

  8. Grey says:

    Obviously royalties aren’t a tax – anymore than a leaseholder from the Crown paying his/her lease is a tax.

    I don’t know how you worked out your graph for the MCA, but your Econometrics get no RSPT is fairly straightforward.

    The kicker is that you are just using what the ATO have described as taxable income – so you are not going to expect much industry variation.

    However, using the same table 8 of the ATO that you did, a very different picture if you look at total income.
    Mining:
    Total Income = 160.3 billion, Taxable Income = 29 billion, Tax = 8.1 billion
    Construction:
    Tot Income = 133 billion, Taxable Income = 10 billion, Tax = 2.85 billion.
    The fact is that mining is so much more profitable than other industries (the closest is financial services) is the reason why we need to consider extracting a higher price for our property.
    And why we also need to consider why we grant them valuable tax concessions like the diesel rebate.
    The issue is not so much the tax rates on company profits but how to maximize the value the taxpayer receives for selling their property.

  9. Gibbo says:

    Slightly off topic but… I’m hearing conflicting opinions so can someone tell me unequivocally if Unions pay tax or not in Australia please?

  10. Spiro says:

    Sinclair, good post and as in your last article on the topic, the paper in question is unpublished, since all NBER papers are working papers and thus works-in-progress. These works are seldom used as reference sources by academic economists. It shows how shallow economic advice to government is that an influential policy making report includes unpublished and non-peer-reviewed work and then misconstrues its results.

  11. Jarrah says:

    Great stuff, Sinc. It’s helping me greatly in an argument I’m having with someone over the MRRT.

  12. Jarrah says:

    “The issue is not so much the tax rates on company profits but how to maximize the value the taxpayer receives for selling their property.”

    That point is relevant, but you’re forgetting that royalties and taxes are not the sole benefits Australia receives from the transaction. So maximising value involves more than just pushing taxes as high as the market will bear. And that’s before we start thinking about more than just forward estimates.

  13. Louis Hissink says:

    Grey, assume you have a million dollars which you have to invest – find me a mining company that offers you 10% return on investment. In fact list the mining companies that will give you a rate of return on your investment that is greater than the RB cash rate.

  14. Jarrah says:

    “can someone tell me unequivocally if Unions pay tax or not in Australia please?”

    As far as I know, they’re exempt from income and capital gains taxes, same as registered employer associations.

  15. Sinclair Davidson says:

    Gibbo – I would have thought that unions would be incorporated as not-for-profit organisations. That doesn’t mean that they wouldn’t pay some tax e.g. payroll tax and the like.

  16. Gibbo says:

    Thanks Jarrah 🙂

  17. Token says:

    Gibbo, Judith’s article a week or so back confirmed Unions don’t have to pay FBT

  18. Jessie says:

    OT
    BHP Billiton announce new CEO Andrew MacKenzie to replace retiring Marius Kloppers.

    MacKenzie has chaired the Demos Institute, UK. A new paper by Demos looks at inter-generational attitudes to the welfare state.

  19. Rococo Liberal says:

    Grey really is an ignorant twunt, isn’t he/she?

    Maybe it’s time Gey had a little lesson.

    First the ATO doesn’t call it taxable income, the Income Tax Assesment Acts do that.

    Secondly, Taxable income = assessable income minus deductions. Taxable income is not same as accounting profit, which takes other issues into account and does not provide for the same deductions of expenses like R&D etc.. In other words Grey, the ‘Total Income’ in your table refers to gross receipts before expenses not to profit. No one is taxed on their gross receiipts without taking expenses into account. But lefties don’t seem to understand this. Thus they would have entities that make a loss pay tax on their gross receipts.

    The effective tax rate for a company is therefore a function of the difference between accounting profit and taxable income. Thus if a company makes $100 in taxable income, it pays 30% or $30 in tax. Its accounting profit may be $110, so its effective tax rate is 27.27%.

    However the ETR is a pretty useless measure of anything but the fact that the tax law and accounting standards don’t coincide. WHo cares. The tax system has been designed with something completley different in mind than the accounting standard.

    Thirdly, companies are only conduits to shareholders. Company tax is a down payment of the tax that the shareholders pay on dividends.

  20. brc says:

    Grey : are council rates taxes?

  21. harrys on the boat says:

    Is this another reason why the MRRT failed?

    Did Wayne use the Henry Review figures as gospel that miners only paid 13 – 18% tax, when the actual figure (plus royalties) is 40%?

  22. Sinclair Davidson says:

    No – it was one of the justifications for the RSPT and then MRRT.

  23. Grey says:

    Lets put it in terms righties can understand.

    I have three properties each of a 1000 hectares each. I don’t like farming as I find it difficult to obtain a ready supply of goat’s milk lattes without which I am absolutely horrid. So I decide to lease them out.

    I lease them out at the flat rate of $10 dollars/hectare.

    Farmer Brown pays me $10,000 and invests another $900,000 and makes a tidy income of $100,000

    Farmer Jones pays me $10,000 and invests another $900,000 and makes a tidy income of $500,000

    Farmer Smith pays me $10,000 and invests another $900,000 and makes a tidy income of $1,000,000

    So here I am with $30,000s while Farmer Smith gets $1,000,000. So why not say to Farmer Jones and Farmer Smith you have to give me 10% of everything you make over $100,000.

    And there is the idea of the mining tax.

  24. rebel with cause says:

    And there is the idea of the mining tax.

    So the idea of the mining tax is to provide relief to your feelings of jealousy and inadequacy?

  25. Grey says:

    Great stuff, Sinc. It’s helping me greatly in an argument I’m having with someone over the MRRT.

    Jarrah, I find his graph a little disingenuous and think his post of 2010 is more statistically transparent.
    http://catallaxyfiles.com/2010/05/23/econometrics-gets-no-rspt/

    Maybe I am wrong with this but I think he is using the fact that the Financial Services and Insurance sector is comparatively large and pays on average only 21% tax on its profits to drag everyone else down (using a weighting of its reported profits – in this case 780 billion). If you look at his 2010 post you see that mining is in fact quite mid-range of economic sectors. The only stand-out being the financial services.

    So I have no doubt his graph is technically true, but it is the graph of a lawyer hired to argue a brief.

  26. Grey says:

    So the idea of the mining tax is to provide relief to your feelings of jealousy and inadequacy?

    No, no, that was just an added bonus.

  27. Token says:

    So here I am with $30,000s while Farmer Smith gets $1,000,000. So why not say to Farmer Jones and Farmer Smith you have to give me 10% of everything you make over $100,000.

    Only a moron or a Treasury official would create policy based upon that information.

  28. . says:

    So here I am with $30,000s while Farmer Smith gets $1,000,000. So why not say to Farmer Jones and Farmer Smith you have to give me 10% of everything you make over $100,000.

    And there is the idea of the mining tax.

    Here is something you don’t understand. If you want equity profits, normally you got to buy equity. You are not sharing the risk.

  29. Infidel Tiger says:

    And there is the idea of the mining tax.

    The government is lazy and should be starting its own mining company but is instead sitting in a cafe?

  30. Grey says:

    Here is something you don’t understand. If you want equity profits, normally you got to buy equity. You are not sharing the risk.

    Nonsense
    http://en.wikipedia.org/wiki/Sharecropping

    There will always be a flow back of money from someone obtaining a rent from the government in order to influence public opinion as to why they should continue to receive that rent. But lets be clear, miners who object to paying super profits are rent seekers.

    I want to lease all 3 blocks of land, if I increase the price per hectare I am going to damage Farmer Brown, but by asking for a share of the profit I only take from Farmer Smith and Farmer Jones what they can afford to pay.

  31. rebel with cause says:

    I want to lease all 3 blocks of land, if I increase the price per hectare I am going to damage Farmer Brown, but by asking for a share of the profit I only take from Farmer Smith and Farmer Jones what they can afford to pay.

    If you own the land then you should be trying to achieve maximum return on your investment – not maximise the amount of tax going to the government.

  32. brc says:

    So here I am with $30,000s while Farmer Smith gets $1,000,000. So why not say to Farmer Jones and Farmer Smith you have to give me 10% of everything you make over $100,000.

    Because, you lazy fool, if Farmer Smith can make that sort of money out of the land, you ought to terminate the lease at the next available opportunity, and get farming yourself, or go into business with farmer smith.

    You *can* put the rent up. And farmer smith can tell you to go jump and find someone else with some land.

    Owning the land just means you control over it’s use. It doesn’t give you a right to every dollar of income that comes out of it. By leasing out the property you forfeit the right to any windfall gains.

    Using your logic, the owner of an apartment rented by a whizkid who makes some software and sells it to Google for a billion is free to be gouged because he made some more money.

    Further using your logic, if I lend money to a bank, and then that bank lends my money to an inventor, who then goes on to make a billion dollars, I should get a higher rate of interest on my property (the money). Because the other guy made a ‘super profit’ I, as the owner of the property, am entitled to a much larger share of their winnings.

    The whole concept of a ‘super profit’ is a marxist term with no reference frame. Super profit over what run? 1 year? 5 years? 10 years? A company that is max-profitable one day can be broke within 12 months.

    You marxist twits really do live on another planet. It’s embarassing to see people with such low levels of understanding about the world in which they live.

  33. Token says:

    Here is something you don’t understand. If you want equity profits, normally you got to buy equity. You are not sharing the risk.
    blockquote>

    Grey repeats the hubris which got Treasury in trouble.

  34. brc says:

    But lets be clear, miners who object to paying super profits are rent seekers.

    I assume that if you object to the government appropriating an extra 40% of your income, you’d be a rent seeker?

    Rent seeking is seeking to change the rules in your favours so you can appropriate economic rent rather than by creating new wealth

    People who seek to impose taxes on energy and have the tax money diverted towards their uneconomic but pet projects : rent seeking

    People who seek to mine resources and sell at a profit to create wealth : normal economic activities.

    People who seek to pay less tax : rational actors.

  35. Louis Hissink says:

    Grey,

    How about answering my question earlier please.

  36. Louis Hissink says:

    So here I am with $30,000s while Farmer Smith gets

    $1,000,000. So why not say to Farmer Jones and Farmer Smith you have to give me 10% of everything you make over $100,000.

    And there is the idea of the mining tax.

    Grey

    20 Feb 13 at 2:48 pm

    Which basically means that you have sellers remorse, that they are making more money from your land than you could have, and after the event you want more money for the contract you previously entered.

    That is the basic definition of greed.

  37. rebel with cause says:

    I have three properties each of a 1000 hectares each. I don’t like farming as I find it difficult to obtain a ready supply of goat’s milk lattes without which I am absolutely horrid. So I decide to lease them out.

    It’s the modern version of the The Ant and the Grasshopper. It’s telling that in times past, most people sided with the Ant. Nowadays of course, the outcome would be considered ‘inequitable’ if the Ant didn’t give the Grasshopper food.

  38. Judith Sloan says:

    As not-for-profit organisations, trade unions pay no company tax and their employees are eligible for the FBT exemption. Same applies to registered employer associations, eg. Ai Group.

  39. Louis Hissink says:

    A trade-union is a not-for-profit organisation? Can’t be – why do anything unless there is a profit in it 🙂

    Kidding.

  40. Gab says:

    They don’t pay capital gains tax either.

  41. eb says:

    Grey gets all wrong again of course.

    The actual tax rate is 30%, so he is already getting $30k from Farmer Brown, $150k from Smith and $300k from Jones. For doin’ nuthin’!

    Now he’s short of a few readies, so he reckons he can rock up and demand even more. Lefties are not complicated, simply driven by greed and envy.

  42. Rococo Liberal says:

    Grey still doesn’t understand the difference between accounting profit and taxable income.

  43. Grey says:

    Rent seeking is seeking to change the rules in your favours so you can appropriate economic rent rather than by creating new wealth

    Not at all, the wealth already exists – in the ground.

    I just want to make sure I get the best price I can for the wealth that belongs to me.

    Naturally the buyer wants to pay the lowest price possible and attempts to manipulate opinion accordingly.

    There is nothing morally wrong about the miners attempting to convince me to sell my wealth for the lowest possible price, just as there is nothing wrong with me turning around and saying “I didn’t come down in the last shower, mate.”

  44. Rococo Liberal says:

    Also Grey doesn’t understand the difference between revenue and capital account

  45. Rococo Liberal says:

    Grey

    Your example just shows that the Government shouldn’t ask for a fixed sum in tax but should tax people according to a percentage of the taxable income they earn. That is what already happens. In other words, you earn a higher taxable income, you pay more tax. Your example doesn’t explain why someone earnring higher income should pay a higher rate of tax on the basis of the industry they are in.

  46. Rococo Liberal says:

    The most spectatular failing of your example is that the Commonwealth Government in this case doesn’t own the farm, the State Govoernments do, and they are already charging rent in the form of royalties.

  47. Grey says:

    Grey gets all wrong again of course.

    The actual tax rate is 30%, so he is already getting $30k from Farmer Brown, $150k from Smith and $300k from Jones. For doin’ nuthin’!

    Tax is beside the point. The cafe owner who serves me my goat’s milk lattes pays tax but he is not leasing anything from me. The 3 farmers are paying tax, the same tax rate as the cafe owner.

    What I am concerned about is the people who lease my property are paying me a fair rent.

  48. Grey says:

    The most spectatular failing of your example is that the Commonwealth Government in this case doesn’t own the farm, the State Govoernments do, and they are already charging rent in the form of royalties.

    Saying it often enough doesn’t make it true. The belong to the crown, how the crown privileges divide up between the states and commonwealth is not spelled out in the constitution but if the seabed controversy is any guide the Commonwealth always takes precedence in a dispute.

  49. . says:

    Here is something you don’t understand. If you want equity profits, normally you got to buy equity. You are not sharing the risk.

    This is entirely true. Sharecroppers would tend to pay less rent than genuine agisters.

    You are trying to bend reality to your will. Ain’t gonna happen. The Government is increasing the risk:reward ratio. Inevitably, as happened in the data, mining investment slowed down.

    You are just bullshitting yourself that up is down.

  50. Louis Hissink says:

    Ther fair rent for your property is what you and the lessee agree on at the signing of the lease.

    If you want to increase the lease payment after disovering the lessee is making more profit of the property than you did, you can only do so if the lease conditions allow it; otherwise you have to wait until the lease expires. If then you want to increase the rent to what you consider “fair” then negotiate that with the lessee; if the lessee reckons its too high, and walks, then c’est ca, you lose unless you can find a sucker to pay your asked for rent.

    But to impose an increased rent after the start of the agreement is pure unadulterated greed based on envy.

    Face it Grey, you are simply another lefty who wants something for nothing.

  51. . says:

    The belong to the crown, how the crown privileges divide up between the states and commonwealth is not spelled out in the constitution

    Yes it is.

    but if the seabed controversy is any guide the Commonwealth always takes precedence in a dispute.

    No.

  52. Grey says:

    Yes it is.

    No it isn’t

    No.

    Yes

  53. Louis Hissink says:

    I should add that if the lease agreement allows for lease escalation if the profit increases by some defined amount, and the lessee is happy with that, cool.

    But trying the rent increase on in a lease that does not specify that rent escalation is, if government, simple theft, the desire to again get something for nothing.

  54. Perth Trader says:

    ”here I am with $30,000s while Farmer Smith gets $1,000,000. So why not say to Farmer Jones and Farmer Smith you have to give me 10% of everything you make over $100,000.’

    And there is the idea of the mining tax.
    Grey..thats a very good example but you’ve missed 2 important points.1 you as the landowner would be paying all local council rates ans reimburseing the local council as per royalties.
    2 If Farmer Smith makes a loss in any year due to drought,drop in commodity prices or increases in costs you as the land owner would be lable for 40% of those losses. That is the RSPT,’resources super profits tax.BAD BAD idea.

  55. brc says:

    Not at all, the wealth already exists – in the ground.

    Complete BS.

    An iron ore rock or lump of coal is worthless.

    It is only worth something once extracted, refined, shipped, contracted and delivered to a buyer. All of that requires capital and labour that the land owner doesn’t possess nor have a claim over.

    A resource in the ground has potential value – in the same way that arts graduates have potential to become Mel Gibson. But until you apply a lot of work and agents and casting calls, what you have is someone not particularly good at parking cars or waiting tables. This ‘wealth in the ground’ line is complete communist rubbish. It’s like saying all Australians have a right to the intellectual wealth in a Year 12 students head.

    What I am concerned about is the people who lease my property are paying me a fair rent.

    Uh oh, we’ve seen that word again : fair. The spectral signature of the vacuuous socialist argument. ‘Fair’ to whom, exactly? I’m sure if you took 50% of my income, you’d think that was very fair. But if someone from the 3rd world helped themselves to 50% of your income, you’d probably find it ‘unfair’.

    If you want fair, play some club cricket with some gentlemen. Everything else is measured in the marketplace when willing buyers and sellers are matched, and fairness is inherent in the agreed price because they’re all voluntary actors.

  56. Grey says:

    Because, you lazy fool, if Farmer Smith can make that sort of money out of the land, you ought to terminate the lease at the next available opportunity, and get farming yourself, or go into business with farmer smith.

    My mate Whitlam tried that, trouble is the miners rich Liberal mates paid some Pakistani to cause that plan to collapse and then subverted the constitution to get him fired.

    Nope, I would prefer to just drink lattes and let the miners do all the work.

  57. brc says:

    I should add that if the lease agreement allows for lease escalation if the profit increases by some defined amount, and the lessee is happy with that, cool.

    Yes, Westfield is an expert at this type of thing. But nobody forces a Westfield lessee at gunpoint to sign a lease. And at least Westfield don’t try on some emotional BS about being ‘for the good of all the shoppers’.

  58. brc says:

    Nope, I would prefer to just drink lattes and let the miners do all the work.

    Having comprehensively lost the argument, we now go back to ‘I’m just doing this for the lulz, I wasn’t really trying to be serious’

    Greed and envy are the genesis of the lefty mindset. They are also the road to a ruined and bitter life. Get rid of them now before they destroy your happiness.

  59. Grey says:

    Uh oh, we’ve seen that word again : fair. The spectral signature of the vacuuous socialist argument. ‘Fair’ to whom, exactly?

    Fair to what the market will bear.
    You known when I was in Angkor Wat there were lots of young children selling T-shirts and postcards. The prices would start quite high, the thing was I didn’t want a t-shirt anyway – so the price would keep dropping.

    Eventually they would say: “You tell me what you want to pay; if I make I profit I will sell, if I don’t I won’t”

    If even 8 year old Cambodian girls can understand the logic of the market, why can’t Liberals?

  60. Louis Hissink says:

    Strawman argument Grey – we do understand the market and your problem is that you don’t because by proposing a super profits tax as a shifting of the goal posts once the game is in play, is, as we have shown here, simple greed on your part. Envy if you can’t expropriate the money from us, and theft if you can if government.

    We have to bear it because government has the “power” to make it happen. It’s called monopoly power because government has a monopoly over coercion.

    That’s the unfairness of it all but which you see as fair.

  61. brc says:

    If even 8 year old Cambodian girls can understand the logic of the market, why can’t Liberals

    It’s you who can’t understand the way things work. We’ve already pointed out that a lease is fair if both consenting parties agree at the commencement.

    It’s you, however, who wants to rewrite the agreement when someone starts making ‘super profits’ because it’s not ‘fair’ when someone gets to make money on your property.

    Greed and Envy – the underpinning of every socialist fool since the idea of stealing from others under the guise of ‘fairness’ began.

  62. harrys on the boat says:

    Grey, is that how you bartered the 8 year old boys?? You filthy deviant.

  63. Token says:

    If even 8 year old Cambodian girls can understand the logic of the market, why can’t Liberals?

    LOL

    After taking the time to explain in detail how little he does not know about economics, Grey gives us a lecture about the marginal utility.

  64. Grey says:

    We’ve already pointed out that a lease is fair if both consenting parties agree at the commencement.

    Luckily the leases my farmers agreed to is renewed every year.

    Can the miners point to a written agreement with the taxpayer that is of longer duration?

  65. Louis Hissink says:

    Grey, you effing moron – it’s called a mining lease that is initially for 20 years duration. Boy you reaslly know how to shoot yourself in the foot, or placing it in your gob.

  66. . says:

    The belong to the crown, how the crown privileges divide up between the states and commonwealth is not spelled out in the constitution

    This is wrong. No singular “crown” is defined in the constitution. It is a misunderstanding. There are seven separate crowns in Australia held by the same monarch.

    Even if the seabed was not defined out to State limits, every other privilege IS defined explicitly or as the residual case.

    but if the seabed controversy is any guide the Commonwealth always takes precedence in a dispute.

    IF they have a right to legislate on the same issue. First of all, they have to own the property to impose a tax on it.

    Section 114 – States may not raise forces – Taxation of property of Commonwealth or States

    A State shall not, without the consent of the Parliament of the Commonwealth, raise or maintain any naval or military force, or impose any tax on property of any kind belonging to the Commonwealth, not shall the Commonwealth impose any tax on property of any kind belonging to a State.

    However, the Commonwealth does not have a right to take over State property unless paid for on just terms or under four other circumstances:

    Section 51 – Legislative powers of the Parliament

    The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:-

    (xxxi.) The acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws:
    (xxxii.) The control of railways with respect to transport for the naval and military purposes of the Commonwealth:
    (xxxiii.) The acquisition, with the consent of a State, of any railways of the State on terms arranged between the Commonwealth and the State:
    (xxxiv.) Railway construction and extension in any State with the consent of that State:
    (xxxvi.) Matters in respect of which this Constitution makes provision until the Parliament otherwise provides:

    Everyone knows this, you are just spreading disinformation to further the cause of a Government that has no legitimacy.

  67. Infidel Tiger says:

    If even 8 year old Cambodian girls can understand the logic of the market, why can’t Liberals?

    If you later found out that the sweet little girl had made 5 times what she needed to make a profit would you have stormed back and pushed over her stall and then kicked a monk in the shins?

  68. . says:

    If even 8 year old Cambodian girls can understand the logic of the market, why can’t Liberals?

    The same idiot thinks you can unilaterally change the risk/reward profile and if the other party changes their operations, then it is a sign of immorality and injustice.

  69. Token says:

    Luckily the leases my farmers agreed to is renewed every year.

    Another point that Grey forgot to mention earlier, and is now introduced with no warning:

    In Grey’s Soviet style state the farmers are not allowed to leave the region for any reason.

    They must take the change in lease or else they get a bullet to the head.

  70. Grey says:

    Grey, you effing moron – it’s called a mining lease that is initially for 20 years duration. Boy you reaslly know how to shoot yourself in the foot, or placing it in your gob.

    LOL – although my understanding is that the mining lease is regarding the use of the land and paid to the land owner, and not relating to the value of the deposit nor paid to the owner of the deposit (although they can be one and the same).

  71. Grey says:

    Section 114 – States may not raise forces – Taxation of property of Commonwealth or States

    A State shall not, without the consent of the Parliament of the Commonwealth, raise or maintain any naval or military force, or impose any tax on property of any kind belonging to the Commonwealth, not shall the Commonwealth impose any tax on property of any kind belonging to a State.

    You see, Dorothy, the Constitution doesn’t mention this issue. This is why Whitlam was able to acquire the seabeds and the Queen refused to hear any petitions from the states.

  72. . says:

    Luckily the leases my farmers agreed to is renewed every year.

    Can the miners point to a written agreement with the taxpayer that is of longer duration?

    Shades of Conroy. What if Swan tells them (even though he doesn’t “own” the minerals) to wear red underpants on their heads?

    You really are a contemptible turd. Royalties are paid on EXTRACTION – nothing to do with changing the rules as convenient to the landlord.

    You have purposively spread ignorance on the law, economics and the operation of mineral royalties.

    You are going out of your way to misrepresent the facts to push ahead a populist agenda that isn’t even supported by the electorate anymore and never had explicit approval.

  73. Grey says:

    They must take the change in lease or else they get a bullet to the head.

    Poor Mr Kloppers – but he was a counter-revolutionary reactionary and he had to go.

  74. Grey says:

    If you later found out that the sweet little girl had made 5 times what she needed to make a profit would you have stormed back and pushed over her stall and then kicked a monk in the shins?

    Look, I just didn’t want a t-shirt, OK. I did have a monk try to hit on me.

  75. brc says:

    If your farmers were asked to agree to a one year lease, then they would never sign it in the first place.

    The only reason a land owner would want a one year lease is if they were planning to shaft the farmer, which you want to do in order to make sure they don’t ‘unfairly’ make too much money, which you want to get your greedy mitts onto.

  76. Token says:

    Shades of Conroy. What if Swan tells them (even though he doesn’t “own” the minerals) to wear red underpants on their heads?

    What, are you assuming the rate of sovereign risk will effect the cost of capital?

    Grey’s example which does not distiguish between accounting profit & taxable income somehow missed the whole cost of capital discussion. He’s talking from a Marxist framework.

    Seriously, morons & Treasury officials are all the same.

  77. brc says:

    Token, I don’t think he even grasps Marx properly, which is not unusual for the greedy, lazy person who just wants to live the life of riley while someone else does the hard work.

  78. . says:

    You see, Dorothy, the Constitution doesn’t mention this issue. This is why Whitlam was able to acquire the seabeds and the Queen refused to hear any petitions from the states.

    No, that is not why. It is because the Commonwealth has a defence prerogative and the right to negotiate on behalf of everyone else and itself in international law of the sea. The fact the Queen wouldn’t intervene in an affair involving the Commonwealth v States where the Commonwealth may have an interest against other realms was merely a good reason to pass the Australia Acts.

    You are arguing that the property rights are not defined and therefore the Commonwealth can acquire any property it chooses from the States without any compensation.

    That is just bullshit, pure and simple. The above outlined why and how property can be acquired by the Commonwealth.

  79. Grey says:

    He’s talking from a Marxist framework.

    No, I am talking from an 8 year old Cambodian girl framework.
    When she thought I might want a t-shirt she tried to ask for the highest price, when she realized I didn’t want a t-shirt she asked me to name a price and then decide if she could make a profit or not.

    So miners like to try and convince us they are doing us a favor by taking are assets at bargain basement prices. If we set a higher price and ignore their protestations they will decide whether they make an acceptable profit or not. The beauty of the super-profits tax was it was designed to be levied at a rate that they could never feel they were not making acceptable profits.

    Naturally they will try to use their patronage in political circles and through the media to minimize the prices they pay us. There is nothing morally wrong with that, but only an idiot would fall for it.

  80. jumpnmcar says:

    Not at all, the wealth already exists – in the ground.

    Grey has no idea what a farm of a farmer is.

  81. Grey says:

    You are arguing that the property rights are not defined and therefore the Commonwealth can acquire any property it chooses from the States without any compensation.

    Except we don’t know if the States do inherit the Crown’s sovereign rights over minerals. The Crown also has sovereign rights over the seabeds, and when there was a dispute with the Commonwealth, the States were not able to assert their claim that they had inherited them.

  82. Token says:

    He’s talking from a Marxist framework.

    No, I am talking from an 8 year old Cambodian girl framework

    Not only is that just plain creepy, your don’t understand that property rights are fundemental in a transaction involving margin utility.

  83. Grey says:

    Grey has no idea what a farm of a farmer is.

    In the particular instance here I believe brc was referring to minerals and moved beyond the farmer analogy

  84. Grey says:

    Not only is that just plain creepy,

    Oh my, you are a sensitive soul, aren’t you?

  85. . says:

    Except we don’t know if the States do inherit the Crown’s sovereign rights over minerals.

    They don’t “inherit” shit. They don’t need to.

    The States own what the colonies owned.

    The Crown also has sovereign rights over the seabeds, and when there was a dispute with the Commonwealth, the States were not able to assert their claim that they had inherited them.

    As discussed above. Defence, law of the sea and guarantee of impartiality could not be given by the Privy Council.

    You somehow think this means the Commonwealth can acquire any property it pleases off the States.

    No.

  86. Louis Hissink says:

    Grey,

    The mining lease is for the minerals only if the minerals are on freehold, or both if the land is a pastoral lease from the Crown.

    The mining lease has zero to do with the landowner, and is a lease bewteen the state and the mining company as lessee, though the mines department might impose conditions etc concerning the pastoral lease.

    In a general case the mining company buys the pastoral lessee out and runs the pastoral lease as a company operation. Freehold it buys the landowner out, but in all cases in Australia, except for some very old land titles, the states own all the minerals, and the mining leases are between the states and the mining lease lessees. There is no mining lease between the mining company and the landowner. Never was.

    Heaven knows where you get your facts from.

  87. Louis Hissink says:

    Grey, the states have primary ownership of the minerals in the ground. They preceded the formation of the Federation, and it is the Federation that is subservient to the states when it comes to mineral rights.

    You have it exactly backwards and it really shows how little history is taught in our schools in Australia.

  88. Grey says:

    The States own what the colonies owned.

    Exactly, but the colonies and the crown are not identical. The colony didn’t own the minerals, the crown did.

  89. brc says:

    A bunch of rocks deep underground are as worthless as an unplowed field or an inexperienced actor. Get that into your head. Miners are not theiving from the public of Australia because they make big profits.

    They enter into an agreement to remove minerals and make money from the extraction process. Once that agreement is entered into, they should be free to make as much -or as little- money as they want.

    It’s only greedy, lazy, envious people who want to stop midstream and shake them down like some type of highwayman. Well, you can do that for a short time, and for a short time it will work (assuming you have a competent administration). But then the miners will stop extracting and both the royalties and the taxes on company profits will go away.

    You’re monumentally ignorant of the realities of life and commerce, but then that is typical of the envious socialist who thinks the world owes them a comfortable lifestyle.

  90. Craig Mc says:

    Oakeshott should be using these non-parliamentary weeks to road test lawn mowers and find a good box trailer anyway.

    Like anyone would trust him to mow their lawns. Basket weaving – now that’s the ticket for you Rob.

  91. Louis Hissink says:

    I might add that the present ICAC activity is all about people having foreknowledge of proposed coal mining licences in NSW and purchasing freehold properties under insider knowledge situations. Now the potential super profits being bandied about are accruing not to the mining company, but to the landowner.

    Another case of the lefty greediness, I suppose.

  92. Pedro says:

    The states own the minerals and they give miners the right to take them subject to paying royalties, which I think are better understood as the price for the minerals or the extraction rights if you wish, but it would not matter if you called it a tax. The important point is that royalties are a part of the total govt receipt from mining activities.

    The comm levies income tax on companies and royalties ought to be a deduction because they are a cost of earning taxable income.

    All australians do not own the minerals so that is not a justification for the MRRT. Whether or not the MRRT is a good tax purely depends on the same issues relevant to the assessment of any other tax, equity and efficiency. The spurious “fair share” argument is not a part of that assessment. Transient high prices are a poor equity justification and the efficiency issues seem pretty apparent.

    Ken baby obviously thought that the people who are used used to charging for minerals were dummies in need of his wisdom. Generally I would assume that the people experienced in the business would be better at it than newbies like Ken and the Goose. I think the scorn for royalties was pretty over done, but I would hope my state govt has mechanisms to suck an appropriate part of any extra high prices that might be around for a while.

    If a temporary increase in prices leads to over investment then it might be better to watch the super profits lead to an over-sinking of costs and thus a higher level of production in the future.

  93. Louis Hissink says:

    Grey, the colony did own the minerals, that’s why the states, which replaced the colonies, own them. There never was a Commonwealth Department of Mines, only the states had that right based on being representatives of the Crown. Remember the Commonwealth is a federation of states, and hence the states existed before the Commonwealth.

  94. . says:

    Exactly, but the colonies and the crown are not identical. The colony didn’t own the minerals, the crown did.

    You are just being dishonest. By colony I mean Crown of the Colony of NSW, etc.

    “The Crown” as a singular entity does not exist. The Crown in the Colony of New South Wales is the Crown in the State of New South Wales, and neither have ever been the same entity as the Crown of any other State or Colony, or the Commonwealth.

    The Crown of each State owns what the Crown of each Colony owns. The Commonwelath Government, or Crown, has no claims on these.

    This is just fucking tedious. You are either stupid or mendacious by arguing a falsehood and capitalising on the literary contractions of others.

    You have found an exception and tried to apply it generally to the law, even where it is contrary to five explicit cases laid out in the Constitution.

    You are wrong. The Commonwealth Government or Crown does not own the minerals in the ground in Australia. No singular Crown exists to claim ownership over such resources.

  95. Grey says:

    There is no mining lease between the mining company and the landowner.

    Fair enough.

    My understanding is that a mining lease is seldom a mechanism for negotiating a price or remuneration – rather the remuneration is a flat rate dictated by state-wide regulation.

    Technically you might have a point, but since 40 years ago the miners subverted the constitution to sack an elected government that was attempting to ensure the People obtained a fair share of their own wealth, so I could live with a few technical breaches.

    And I am pretty sure most Australians would agree.

  96. . says:

    Technically you might have a point, but since 40 years ago the miners subverted the constitution to sack an elected government

    Oh just fuck off you fucking barking moonbat…

    People obtained a fair share of their own wealth, so I could live with a few technical breaches.

    Vomit.

    And I am pretty sure most Australians would agree.

    Excrement.

  97. brc says:

    Technically you might have a point

    No shit sherlock. You were wrong all along and have no clue.

  98. Sinclair Davidson says:

    . – anger pills.

  99. Token says:

    Technically you might have a point, but since 40 years ago the miners subverted the constitution to sack an elected government

    This is why I love free speech. Thanks Grey for confirming your status as a tinfoil hat wearing conspiracy theorist.

  100. Grey says:

    “The Crown” as a singular entity does not exist. The Crown in the Colony of New South Wales is the Crown in the State of New South Wales, and neither have ever been the same entity as the Crown of any other State or Colony, or the Commonwealth.

    The Crown of each State owns what the Crown of each Colony owns. The Commonwelath Government, or Crown, has no claims on these

    That’s a theory, but its not in legislation nor is it always recognized in the courts.
    See the seabeds controversy. Property that was vested in the crown was successfully claimed by the Commonwealth by the Whitlam Government. Nor was the legislation of Western Australia to over-ride the Commonwealth’s Native Title legislation that affected Crown land in WA upheld by the High Court
    http://www.austlii.edu.au/au/cases/cth/high_ct/183clr373.html

    You might say its a good theory, it might be an excellent theory. But unless you can point to legislation or precedence then it is no stronger than your personal assertion.

  101. Fisky says:

    Miners did not subvert the Constitution. John Kerr was within his rights to sack the Whitlam government and he did so with the full support of the Constitution. Whether he should have done that is another argument.

  102. . says:

    Piss off Grey, I’ve discussed every one of those points before and demonstrated why you are wrong.

    Native title? What an irrelevant load of piffle.

  103. Token says:

    Whether he should have done that is another argument.

    If Kerr had not acted the Lefties would have found another reason to rationalise the thumping the inept Whitlam received.

  104. Grey says:

    No shit sherlock. You were wrong all along and have no clue.

    Not at all, an analogy that I used regarding farming leases doesn’t completely translate to mining. But analogy is just an analogy.

    But that doesn’t alter the basic point that the miners tries to create opinion that ensure they can acquire our property for the lowest possible price, whereas it is in our interest to try and get the best possible price for our property.

    I always expect rent-seekers to try to continue holding onto their rents (in this case cut-price minerals), the responsibility of Government is to govern for the People, not the rentseeker.

  105. C.L. says:

    Speaking of energy plutocrats…

    In 1977, Gough Whitlam sought campaign funds from Saddam Hussein.

  106. Grey says:

    Piss off Grey, I’ve discussed every one of those points before and demonstrated why you are wrong.

    Its a shame the High Court didn’t agree with you when they struck down the WA legislation blocking Native Title on WA Crown land.

  107. Grey says:

    In 1977, Gough Whitlam sought campaign funds from Saddam Hussein.

    I think he was in the queue behind Dick Cheney.

  108. Jim Rose says:

    Dot, Prior the acts of union, the UK was a personal union but separate countries.

    They were personal unions because the King of England was the King of Scotland and King of Ireland.

    The true contitutional trivia buff will also know that the King of England also claimed to be the King of France in their style and titles for 500 years.

    Also there is the lord of mann and her majesty, the duke of Normandy in the Channel Islands.

    The meanings of the crown as discussed in sue v. hill.

    the queen is a corporation sole in perpetual succession – she may possess property as monarch which is distinct from the property she possesses personally, and may do acts as monarch that are distinguished from their personal acts.

    Elizabeth II has several corporations sole – Her Majesty the Queen in Right of the United Kingdom, Her Majesty the Queen in Right of Canada, Her Majesty the Queen in Right of Australia are all distinct corporations sole. She is also a distinct corporation sole for states and provinces.

  109. . says:

    Its a shame the High Court didn’t agree with you when they struck down the WA legislation blocking Native Title on WA Crown land.

    No, it is irrelevant.

    Please cite the line in the judgment where the HCA disagreed with me, which would be odd because you actually agreed with me before when you found it useful to capitalise on some shorthand people were using for “Crown of the State of X”

    Jim

    Tell it to grey, the idiot is begging for an educaiton.

  110. Driftforge says:

    Grey is right in principle regarding the collection of state rents; as was the concept of the MRRT.

    It is not in the state interest – not in our interest – to allow state resources to be sold rather than charged at the current rate.

    Where both Grey and the government went square is that thought they could get away with stealing back stuff they had already sold.

    The federal government also further tried to steal state resources that they have never had valid claim to.

  111. Louis Hissink says:

    Grey,

    My understanding is that a mining lease is seldom a mechanism for negotiating a price or remuneration – rather the remuneration is a flat rate dictated by state-wide regulation.

    Technically you might have a point, but since 40 years ago the miners subverted the constitution to sack an elected government that was attempting to ensure the People obtained a fair share of their own wealth, so I could live with a few technical breaches.

    And I am pretty sure most Australians would agree.

    That’s the established rules – the royalties are set at a specified rate – mining operations are generally based on a mine-life of at least 10 years and we need a predictable royalty rate in order to do our income modeling to see if we get a profit. The ultimate profit is the cheque sent out to the owners of the mining company, the shareholders. Others here can educate you on what the accounting and etc profits are.

    I would suggest you plot the BHP-Dividend rate for the last 50 years and see how it compared with the cash rate. I recall doing a discounted cash-flow analysis of the profits of a coal company in NSW during my post grad studies and after factoring in inflation, the company actually didn’t make a profit.

    As for 1975, you had better come up with some hard facts to support your allegation that the mining industry subverted the constitution in order to sack the Whitlam Government.

  112. Grey says:

    Dorothy, a quick skim read seems to indicate that the High Court upheld the right of the Commonwealth to pass legislation in regards to WA Crown land on the basis of section 109 of the Constitution

    COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT – SECT 109
    Inconsistency of laws

    When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.

  113. Grey says:

    As for 1975, you had better come up with some hard facts to support your allegation that the mining industry subverted the constitution in order to sack the Whitlam Government.

    To be honest, I wasn’t paying much attention at the time.
    The whole Khetami affair smells of entrapment. As far as the Dismissal goes, I don’t really know.

    Nonetheless, every time the ALP tries to gain a larger share of the country’s mineral a Prime Minister seems to get deposed soon afterwards.

  114. Louis Hissink says:

    Grey,

    Pity we haven’t got these new offence laws in place, I could have a lot of fun with you and the lawyers from hell.

  115. . says:

    COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT – SECT 109
    Inconsistency of laws

    Mentioned previously, moron. Now read that in conjunction with s 51 xxxi-xxxiv and xxxvi and s 114.

    Nonetheless, every time the ALP tries to gain a larger share of the country’s mineral a Prime Minister seems to get deposed soon afterwards

    Hmm dickless, because the ALP does not own it in any case and you live in a democracy.

  116. . says:

    Dorothy, a quick skim read seems to indicate that the High Court upheld the right of the Commonwealth to pass legislation in regards to WA Crown land on the basis of section 109

    Not good enough. Show me the exact line where I am contradicted and why you can change your argument and still be correct.

    You really are a desperate, shambolic person if you are spreading disinformation to shill for a Government at death’s door.

  117. Grey says:

    Not good enough. Show me the exact line where I am contradicted and why you can change your argument and still be correct

    No, Dorothy, I have not changed my argument – not like someone who couldn’t read a treasury graph.

    As far as I understand the matter the exact relationship or even existence of a crown of the states and the crown of the commonwealth is a matter of theorizing and dispute and will probably be only determined on the basis of individual case law.

    You seem to have an interpretation of Section 51 which you believe is correct. However, when push comes to shove the courts have allowed the Commonwealth to make determinations on sovereign rights in terms of the seabeds and in regards to crown land.

    I don’t pretend to be able to predict exactly how the courts will rule in the future. What you are confusing are arguments that people have put forward as already being rock solid findings.
    http://www.abc.net.au/pm/content/2012/s3459748.htm
    I will take the word of constitutional experts over yours, Dorothy.

    ANNE TWOMEY: You certainly don’t own the minerals beneath your land, that belongs to the Crown. Now the difficulty in Australia is well how do you divide that up when you’ve got different crowns?

    You’ve got the Crown in right of the state and the Crown in right of the Commonwealth and who gets what? The general view’s been taken in the past that it is the states that get the sort of property rights; so control of the soil and the subsoil and the minerals and all the rest of it and the Commonwealth gets other sorts of prerogative rights like powers in relation to external affairs and those sorts of things.

    That may change in the future. There was some suggestion in a High Court case recently that the rights of the states in relation to minerals and royalties may have been wrongly distributed and that indeed the Commonwealth may well have some rights to royalties which it didn’t ever suspect that it did.

    Dorothy, I am not saying you are wrong, nor I am saying you will be proved wrong. All I am saying is that it has not been determined conclusively yet.

    Personally I am believer that Australia is best served by having a strong federal government and the more powers that evolve to the centre the better. I don’t see we gain much from commonwealth-state tussles. And generally the people who enjoy them are importing their political beliefs and ideologies from an American context that doesn’t belong here.

  118. Sinclair Davidson says:

    dot and grey – you are filling up the thread with nonsense. Please stop.

  119. Rabz says:

    Personally I am believer that Australia is best served by having a strong federal government and the more powers that evolve to the centre the better.

    Oh, FFS. Have you had your head buried in the sand for the last five or so years?

    I used to be an advocate of the emasculation of state gubberments, until these toxic labor twats happened on the scene.

    I’m not a fan of totalitarianism, grey. It shames you that you so obviously are.

  120. Jim Rose says:

    Sinclair, What is the incidence of a resource rent tax on internationally mobile investors?

    By and large, high rates for these taxes reduce investment and depress local wages and mining rent shares. Taxing footloose capital and explorers is quixotic.

  121. Louis Hissink says:

    I’ve been told that BHP-Billiton had an effective tax rate of ~40% – anyone come across that number anywhere?

  122. Jc says:

    It’s actually 44.50% Louis.

    Here

    Underlying EBIT (Earnings before interest and taxes) decreased by 15 per cent to US$27.2 billion

    Our payments to governments in the past year, included
    US$12.1 billion in company taxes, royalties and certain indirect
    taxes

    See here

    Show that to any scumbag sucker who suggests they aren’t paying da fair share.

    Wipe the floor with them.

  123. Louis Hissink says:

    OK, just announced today, BHP-Billiton effective tax rate, including royalties, was 38%.

    Source

  124. Louis Hissink says:

    JC, ta, and Pete Jonson mentioned he read 48% somewhere, hence my fossicking around for numbers. I need to pen some more paras and find a source for that number of 48% – PJ reckoned he read it in some recent article but can’t recall which one or where.

  125. Sinclair Davidson says:

    Jim – if the local spruikers are to be believed it falls on the miners (actually their shareholders). But I suspect it ultimately gets shared around the Australian community in reduced activity (compared to otherwise) in proportion to exposure to the industry.

  126. . says:

    No, Dorothy, I have not changed my argument – not like someone who couldn’t read a treasury graph.

    You did change your argument. You couldn’t read a table. Do we really want to go there again? ‘Anyone with a brain can see that revenue fell under Reagan’…

    As far as I understand the matter

    Not good enough.

    the exact relationship or even existence of a crown of the states and the crown of the commonwealth is a matter of theorizing and dispute and will probably be only determined on the basis of individual case law.

    There are seven crowns in Australia. This is a fact.

    You seem to have an interpretation of Section 51 which you believe is correct. However, when push comes to shove the courts have allowed the Commonwealth to make determinations on sovereign rights in terms of the seabeds and in regards to crown land.

    No.

    Seabeds and native title, you dishonest, stupid fuckwit.

    Dorothy, I am not saying you are wrong, nor I am saying you will be proved wrong. All I am saying is that it has not been determined conclusively yet.

    You are running interference.

    If you really wanted to do something useful Sinc, you’d cut this “honest broker” crap and delete everything Grey has ever wrote.

  127. . says:

    It’s actually 44.50% Louis.

    This is before personal income tax.

    This is an extraordinary amount of tax to pay.

    The only rent being earned by a windfall is that accumulating in the consolidated revenue fund.

  128. Jc says:

    Louis, I reported the past year’s reported numbers not the ones announced today. However it gives more credence to just what they are paying over two years.

  129. Louis Hissink says:

    That was for OZ I suspect only. Kloppers reckoned 6.3 , my source 6.1, so somewhere else they are paying a bit more tax than here. ppphhh.

  130. Louis Hissink says:

    Keep me busy for a couple of hours – and off the streets as well.

    There’s an interesting website I stumbled on tonight spruiking the idea that mining companies pay very little – one Peter Martin. Sinc gets mentioned in despatches but its from 2010, so the analysis would be dated.

  131. . says:

    Question

    If I had BHP shares so that I earned 80k AUD of dividends a year, how would that translate into an EMTR of a small to medium business who was taxed in the same manner but was a sole trader?

    I’m getting some figure like a sole trader with NPbt around 133k paying an EMTR of around 62%.

    If that’s anywhere near close, the entire :mining not paying their fair share” meme is the most outrageous lie spread by this shambolic Federal “Government”.

  132. Jim Rose says:

    thanks Sinclair, one test of incidence is who complains about the tax rise. that would suggest the industry paid something.

    then again, if the tax reduces mining exploration, they have few chances to earn the standard rate of return.

  133. Louis Hissink says:

    So where on earth do our ALP politicians get the idea we are paying SFA tax? The numbers have to be coming from Treasury surely.

  134. Louis Hissink says:

    Jim, and don’t forget the risk factor – we in the industry are very good at blowing capital into smithereenies with unsuccessful exploration or miscalculating ore reserves, (the latter not so much these days, the former being standard OP). How many are expecting a capital loss from bank term deposits or bonds?

  135. Tracey says:

    “Lets put it in terms righties can understand.”

    Don’t assume we don’t understand your argument. We do understand it. Your problem is that we recognise it as the immoral, lazy and greedy bullshit that it is.

    “What I am concerned about is the people who lease my property are paying me a fair rent.”

    You were happy with the agreed rent before your innovative tenants worked their guts out to turn a profit. Had they made a loss would you be offering them a discount?

  136. Grey says:

    It is kind of beside the point, but the Constitution Section 51 does give the Commonwealth very extensive taxation powers

    (iii) bounties on the production or export of goods, but so that such bounties shall be uniform throughout the Commonwealth;

    If they wanted to the Commonwealth would be able to impose their own royalties. Not that anyone is running that argument at the moment – but its not unconstitutional.

  137. Grey says:

    You were happy with the agreed rent before your innovative tenants

    Speak for yourself – I want the Commonwealth to be a sleeping partner in all mining projects.

    Is the mining industry any more innovative that the construction industry? So why is it so more profitable? Because the mining industry is getting a cut price injection of taxpayer value, while the construction industry creates its own value entirely.

    worked their guts out to turn a profit. Had they made a loss would you be offering them a discount?

    I believe that was part of the original version of the mining tax. I don’t know about the watered down version

  138. Sinclair Davidson says:

    one test of incidence is who complains about the tax rise

    That assumes no fiscal illusion and an understanding of incidence analysis.

  139. Sinclair Davidson says:

    Grey – please go look at the Treasury FOI website. You’ll find the Commonwealth Solicitor General’s email stating that the Commonwealth had no power to tax minerals. That is one of the reasons the RSPT and MRRT was so complicated – to get around the constitutional impediment to taxing state property. This point is getting very tedious.

  140. Louis Hissink says:

    Grey, have you numbers to back up your assertion that the mining industry is more profitable than the construction industry? Making wild allegations without numbers to back it isn’t a good look.

  141. Jc says:

    Speak for yourself – I want the Commonwealth to be a sleeping partner in all mining projects.

    The ownership resides with the states, Greys, you moron.

    Is the mining industry any more innovative that the construction industry?

    Yep, they are. But what if they weren’t? So what Godfrey?

    So why is it so more profitable? Because the mining industry is getting a cut price injection of taxpayer value, while the construction industry creates its own value entirely.

    You fucking idiot ignoramus. If you placed a bet on every mining company that has existed in the past 113 years you would have lost money. Mining has been a shit long term investment. The only times you can make money on mining is when there are spikes in commodity prices otherwise you lose.

    STFU, you gas bagging no-nothing moron.

    I believe that was part of the original version of the mining tax. I don’t know about the watered down version

    No dickface. The original version was to up the tax rate… the thieving…. and then if the miners made a loss they would receive a certificate of credit from the Commonwealth which was un-tradeable and meant the government could walk away from it. They would too if the claims became big enough and why no one trusted the paper the certif was written on.

    Seriously, Shut up, you retard.

  142. . says:

    Is Grey seriously arguing that a tax on anything, even otherwise illegal, is made legal by calling it a “reverse bounty”?

    Grey probably also thinks summary executions get around the right to a trial by jury, since there is no trial.

    Hey Grey can the Commonwealth compulsorily acquire assets by calling the acquisition an “in-kind reverse bounty”?

    This is just a authoritarian wet dream. Give it up.

  143. Grey says:

    I found this :
    http://archive.treasury.gov.au/contentitem.asp?NavId=087&ContentID=1936

    There are three entries with AGS in the title. I have read all three. The constitutional issue discussed relates to s.51(ii) ” as not to discriminate between States or parts of States; ”

    Maybe there is an earlier FOI? BTW the original Ken Henry proposal was that royalties were to be abolished entirely, the early emails released in this FOI don’t see any constitutional impediment to removing royalties entirely due to the broad powers granted to the Commonwealth under taxation.

    I refer in particular to the advice of the AGS on the 9 December 2009, “Summary of Advice” to John Gallagher of the Treasury, points 16,17 and 18

  144. Sinclair Davidson says:

    The one where it says the RRT will replace state royalties. Hahahaha. Then it says that making laws with regards to minerals requires a commonwealth head of power and then says no such power exists but commonwealth can tax goods created for market etc. etc. etc.

    If you look at the Treasury documents you’ll find discussion about the taxing point being the gate price because they can’t tax the mineral itself until it is taken out of the ground. States don’t have that problem.

    This has been the problem all along – if the commonwealth created a common royalty scheme with the consent and cooperation of the states they’d have gotten away with it. But they wanted the money for themselves and the states said ‘no’.

    So there were two constitutional problems (1) no power to tax minerals (2) unable to expropriate the minerals without paying compensation to the states. Solution? very convoluted scheme to circumvent the constitution.

  145. John Mc says:

    If they wanted to the Commonwealth would be able to impose their own royalties. Not that anyone is running that argument at the moment – but its not unconstitutional.

    Perhaps not unconstitutional but as a country based on federation, and that believes in the benefits of federation, we know it’s in our interests to leave these powers to the states, wouldn’t you agree?

  146. Grey says:

    Hey Grey can the Commonwealth compulsorily acquire assets by calling the acquisition an “in-kind reverse bounty”?

    Who mentioned in-kind reverse bounty?
    If the Commonwealth wishes to impose taxation it is fully empowered to do so under Section 51 of the Constitution, provided it does not discriminate between the States

    The Australian Government Solicitor put this point most forcefully.
    http://archive.treasury.gov.au/documents/1936/PDF/1_AGS_advice_on_constitutional_issues.pdf

  147. Tracey says:

    “Is the mining industry any more innovative than the construction industry.”

    I don’t know the answer to that and don’t pretend to. I think what cannot be logically disputed is that mining companies certainly take great risks in terms of investment (with their own, not taxpayers’ money) than others so why shouldn’t they enjoy a commensurate financial gain when those risks pay off?

  148. Louis Hissink says:

    Seems to me that if the Commonwealth could, it would, but hasn’t so it is a grey wind that blows to nowhere here.

  149. Sinclair Davidson says:

    Grey – you’re not reading the material properly. That was one objection to the RRT but not the only objection. If your argument is correct, the Commonwealth could simply have introduced the RSPT and replaced the state royalties without consulting the states, but they didn’t because they couldn’t.

  150. Grey says:

    If you look at the Treasury documents you’ll find discussion about the taxing point being the gate price because they can’t tax the mineral itself until it is taken out of the ground. States don’t have that problem.

    Maybe if you could link to the document itself, as the only issue I can find they seem most concerned about not discriminating between the States.

    I don’t feel that a requirement to only tax minerals after they have been removed from the ground a very significant impediment to implement any tax that could be conceivably proposed.

    The mining tax was designed to only go for super-profits deliberately. It has been explained often enough. Increases in royalties can result in some projects being priced out of existence. What you view as convolution was a design to achieve a particular goal.

  151. Louis Hissink says:

    Grey, does us all a favour, define explicitly what a super profit is.

  152. Gab says:

    Grey – you’re not reading the material properly.

    Nice try but that won’t interrupt his narrative. He’s worked very hard today for Labor, he’s not going to let facts get in his way now.

  153. Sinclair Davidson says:

    I don’t feel that a requirement to only tax minerals after they have been removed from the ground a very significant impediment to implement any tax that could be conceivably proposed.

    Indeed – but that isn’t a royalty.

    The mining tax was designed to only go for super-profits deliberately.

    Only if you define super-profits as any return greater than the risk-free rate.

    Increases in royalties can result in some projects being priced out of existence.

    That is always true – the price of an input to production may increase and drive any firm out of business.

    What you view as convolution was a design to achieve a particular goal.

    Yes – that is always true too.

  154. Louis Hissink says:

    For those interested I waffle on about some aspects of the MRRT here, with additions tomorrow night.

  155. Popular Front says:

    Reading this article I was reminded of a line from ‘Yes, Minister’ where Jim says “If you start a newspaper article with a picture of Dirty Den, everybody wants to read it, but if you start it with a picture of the Minister for Trade & Industry (or in this case Rob Oakeshott) NOBODY wants to read it”.

  156. Louis Hissink says:

    Another point about Sinc’s graph at the top – the ETR has to be a calculated average and hence there will be mining companies which have ETR’s greater and less than the mean (iff it’s normal) and we know already that BHP-B has ETR of 44.5, and one’s that produce zero income from zero production, will have an ETR of Zero, of which there are many, which implies that most producing mining operations/companies, would have an ETR > the mean, and the conclusion has to be pretty obvious.

    Most if not all producing mining companies have ETR’s in excess of the mean ETR plotted above.

  157. JQF says:

    Lets put it in terms righties can understand.

    Wow, that’s what I call a hypothetical. Don’t worry about it Grey. What with your grasp of economics, finance and ethics, you’ve got Buckley’s of ever owning more property than you can cover lying down.

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