Someone needs to tell Wayne Swan that the commodities boom ended a couple of years ago. They might also point out to him that the Minerals Resource Rent Tax whose passing he laments, was almost certainly costing more to comply with, administer and collect than it raised.
The former Treasurer was tweeting away today in response to the repeal of the tax in the Senate.
…The MRRT was a tax on the profit generated by iron ore and coal, replacing the even less-well-conceived Resources Super Profits Tax…The problem with a profit-based tax like the MRRT in the current environment is that there are no super-profits to be taxed. There’s barely a profitable coal mine in the country and most iron ore miners other than Rio Tinto and BHP Billiton will, with iron ore prices now down to a smidgeon over $US87 a tonne, be struggling for their survival.
…[the tax] raised effectively no net revenue and would have been unlikely to have raised anything meaningful unless or until there was another “once-in-a-generation” commodity price boom. That might take a while.
Some selective memory there. The MRRT was a butchered tax because it was designed by BHP, Rio and Xstrata to not work. Wayne Swan’s crime, and that of Julia Gillard and Martin Ferguson, was accepting it. In doing so they perpetrated the most expensive fraud in Australian history (and possibly global history). The original tax is estimated to have collected something like $100 billion far into the future, though that would probably have come down given Treasury’s penchant for optimism.
Moreover, the miners were in a position to conduct their taxation coup, in part, because hysterical attacks in the business media, most obviously at Business Spectator, had helped destabilise the Government. Bartho is hardly in a position to complain about a butchered tax that he helped create.
As for whether it would have collected anything now, were the RSPT in operation, small miner taxes would be collapsing to zero and providing them with large rebates as tax-payers shared the hurt through the virtual equity ownership structure. BHP and Rio would still be paying plenty and it would not be effecting their behaviour at all.
If it were the MRRT, in another few years it would also begin to collect revenue as the depreciation of assets that the miner’s added to the legislation drew to a close. Given the long term price of iron ore is expected to be $80, offering a margin somewhere between 80% and 100% per tonne, there will still be plenty of super profits to come that Australians won’t share in thanks, in part, to Stephen Barthlomeusz.
