The mining tax’s poetic denoument

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From The Australian:

The mining tax that was originally forecast to produce $4 billion in revenue this financial year has raised just $232 million…an analysis by The Weekend Australian shows the tax has failed to raise revenue even though the profits of the three big iron ore miners soared by 81 per cent and the price of the commodity rose to more than $US130 a tonne.

The miners made combined half-year profits of $US14.58bn, compared with $US8.04bn a year earlier…BHP was the only big iron ore miner to pay the minerals resource rent tax in the six months to December 31.

The Coalition is likely to win the support of enough crossbench votes to repeal Labor’s MRRT in the new Senate, which begins sitting after July 1.

The Palmer United Party, Democratic Labour Party, Liberal Democratic Party and Family First all support scrapping the tax on iron ore and coal.

It might have been useful if The Oz had offered a reason for why the tax failed to raise revenue. It is likely because the original tax design was altered by BHP, Rio, Xstrata and the Gillard Government to allow the inclusion of market values for mines. That means that the miners can claim depreciation from a valuation that includes the rent that is supposed to be taxed. Thus, it is neutralised.

Sooner or later, that depreciation would also have run down, at which point the MRRT might actually have worked. No longer.

That Clive Palmer is now set to vote down the tax, and will directly benefit personally from doing so, is a fitting end to an episode of rentier capitalism of truly magnificent proportions.

Comments

  1. It’s an extraordinary story, from Rudd’s bastardisation of the Henry review to Gillard’s total capitulation to the big foreign owned miners.

    The Labor handling of the Resource Rent Tax really rung the bell for the total capitulation of the Labor party into a poll-driven, hollow-man riddled, bunch of nobodies with the spine of a rotting jellyfish.

    That the mining industry acted with such vicious self-interest reflects the complete moral failure of the modern executive and the corporate culture.

    This is where we are now I guess.

    • Excellent comment. These reasons alone are enough to vote for the Greens, simply because the alternatives are so awful.

    • ceteris paribus

      Yes, AJ, it is truly “an extraordinary story”, down to Gillard’s selling of Australians’ birthright to the Mining Council heavies for a chance to try on the crown.

      Some skilful writer should really make it into a mini-series.

    • AND THE PROBLEM IS, while all here bad the MSM for the delusions of the masses, even those on these pages bag the Greens who were the only ones to vote against any altering of the original tax.

      Ideological strait jackets fit many people no matter how muck knowledge they have.

  2. Agree aj.
    Not even a firesale.
    Aus gave away resources in exchange for exploration fees + royalties then lost out on revenue due to accelerated asset depreciation claims.
    Glad I do my own tax records.

  3. sydboy007MEMBER

    hush. We all know what’s good for big business is well good for us. Um yeah, well it’s been REALLY good for big business lately.

  4. The MRRT was forecast in PEFO to raise nearly $2b in 2016-17 (once the big immediate deductions for the recent upstream investments had worked through the system).
    In other words the govt, by abolishing the MRRT, is gifting the big iron ore miners (and their largely foreign shareholders) $2b in that year.
    The miners really are in a class of their own as rentseekers. The car industry and SPCA must be looking on in awe.