No carbon tax to pay and as of any minute no mining tax either:
The Abbott government is preparing to put the mining tax on the scrap heap as its repeal bill passed the lower house for a second time.
The government rammed its bill through on Thursday, limiting debate to under two hours.
The bill is now ready for a fresh Senate on July 1, where it’s likely to pass with crossbench support.
The Senate rejected the same bill in March.
It would have worked in time as the miner-inserted depreciation rort ended. It sure as Hell won’t work if there’s no tax at all. Which, according to the marvelous Michael West, is where we find Glencore:
Australia’s largest coalminer, Glencore, paid almost zero tax over the past three years, despite income of $15 billion, as it radically reduced its tax exposure by taking large, unnecessarily expensive loans from its associates overseas.
At up to 9 per cent, the interest rates on these $3.4 billion in loans were double what the company would have had to pay had it simply borrowed the money from the bank.
As it was claiming tax breaks in Australia on these inflated interest payments, the secretive Swiss-based multinational actually increased its lending to other related parties interest free. This may include its executives. Nobody from Glencore, which used to be called Xstrata, was available for comment despite repeated requests.
The aggressive tax avoidance tactics of Glencore Coal International Australia Pty Ltd have been identified in an independent analysis of the company’s accounts for Fairfax Media by an expert in multinational financing.
Along with the blatant irregularities in its borrowing and lending, the study also found a hefty increase in Glencore’s coal sales to related companies (up from 27 per cent to 46 per cent of total sales, with no explanation), indicative of transfer pricing – also known as profit-shifting – and an activity that appears to breach Section IVA of the Income Tax Assessment Act – the part that deals with schemes designed to comply technically with the law but whose ”dominant purpose” is really to avoid tax.
”The reality is that the whole of the Glencore Xstrata Group is now run as a series of business units controlled by one company (Glencore Xstrata Plc, incorporated in the UK, listed on the London and other stock exchanges), with its registered office in Jersey (a tax haven) and its head office is in Baar (Switzerland),” the report said.x for shareholders. The question is, are they sailing too close to the wind, and should the ATO be at least seeming to do something in the face of aggressive avoidance?
A quick remainder that we’ve been living through the greatest coal price and volume boom in Australian history, and here’s a quick recap of the public policy debacle that got us here:
- the Henry Tax Review suggests a resource rent tax to capture a fairer share of mining boom profits for Australian tax-payers and to fight Dutch disease by preventing an overly large reliance upon mining forming in the economy;
- Kevin Rudd and Wayne Swan gut and repackage the review as a resource super profits tax (RSPT);
- a co-ordinated advertising and editorial war managed by the Minerals Council of Australia weakens Kevin Rudd in the polls;
- Julia Gillard and Bill Shorten launch a coup even as the polls turn in Kevin Rudd’s favour, toppling the PM;
- Julia Gillard and Wayne Swan allow BHP, RIO and Xstrata (now Glencore) to re-write the RSPT legislation in the Cabinet Room itself, inserting the provision that mines can be valued at market rates allowing them to depreciate the very rents that are embedded in those valuations and rendering the tax obsolete (until depreciation ends), costing tax-payers somewhere between $100 and $200 billion;
- Tony Abbott resists the tax from the beginning and commits to its abolition on the argument that it will kill the boom, and
- Tony Abbott abolishes the tax before if can collect a cent as boom dies of natural causes.
The most wondrous thing about this episode is that is has transpired without a riot of Australians descending upon Canberra with torches and pitchforks.
