Mining tax sound and fury

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Is there another twist in the mining tax saga? The players are in motion. First the Greens last yesterday:

Greens leader Christine Milne will meanwhile try to plug a $2.2 billion hole in the federal budget by stopping companies claiming credits on royalties under the minerals resource rent tax. “Let’s actually plug the gap,” she told reporters on Tuesday.

The Mid-Year Economic and Fiscal Outlook trimmed what the mining tax will raise in its first three years by a third to $9.1 billion.

Companies are understood to have paid little in the first three months of the tax, and the figures probably won’t be made public before the next budget issues fresh revenue forecasts.

“The fact that it has raised nothing shows it was badly designed,” Senator Milne said, adding there were too many concessions. “That’s why we are trying to fix it.”

And today it’s the independents (h/t Mav):

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THE federal independent MP Rob Oakeshott has declared the mining tax ”unsustainable” and said unless federal and state governments sort out the dispute over royalties, the tax must be brought back to Parliament and amended.

Mr Oakeshott described as a ”complete waste of time” a lengthy meeting with Treasury officials in Sydney on Tuesday, which he requested after reports the mining tax, which began on July 1, made little or no revenue in its first three months of operation.

It is understood Treasury would give him no figures on how much the tax had made or was expected to make, citing privacy concerns because only a handful of companies were liable for the tax.

Mr Oakeshott has complained that a loophole that allows miners to deduct from their mining tax liability the royalties they pay to states needs to be closed. The Greens are of the same view because the loophole has become an open invitation to the states to keep raising royalties and gouging the mining tax proceeds.

”Commonwealth-state relations are going to be tested to the max,” Mr Oakeshott said.
I can only ask, how does complete opacity around this tax in any way enhance an informed market around the effected companies? This privacy objection is as thin a Paris Hilton. And Ken Henry has weighed in as well on costs:

AUSTRALIA’S big mining companies have created the high-cost culture to which they are now objecting, former Treasury secretary Ken Henry says.

They are complaining that Australia’s costs are increasing at the same time as they are pushing them up, he told an audience at the Academy of the Social Sciences in Sydney on Tuesday night.

”Business people talk a lot about Australia being a high-cost, low-productivity country, but the fundamental reason labour costs have been increasing at the rate that they have is the mining boom,” he said in answer to questions.

”Miners and energy producers are paying more for labour, because they want to. In order get labour to work in the mines, they have to pay handsome wages to attract the labour out of the places from which it has been attracted.

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Can anything come of this? The minor parties have sway in the minority government obviously but for the government to move it would need implicitly to acknowledge that its deal with BHP, Rio and Xstrata was a mistake. Moreover, the big three would immediately launch the mother of all media stinks.

In the cold hard light of day, the Gillard government is an accomplice in this tax misdemeanor and needs to keep the body buried.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.