Treasurer Jim Chambers has again ruled out the idea of introducing a windfall profits tax, despite Nobel prize-winning economist Joseph Stiglitz having personally lobbying Chalmers to adopt such a tax.
Stiglitz contends that a windfall profits tax is a “no-brainer”, claiming that it would discourage companies from putting up their prices. He also says that “wages are not really the source of the inflation” in Australia, but rather excessive war profits from big business:
Stiglitz said a windfall profits tax was a “no-brainer” as companies made “huge windfall profits” during the Covid pandemic, and as the Russian invasion of Ukraine had increased energy prices.
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“It makes a great deal of sense at this current juncture – it’s not as if the energy companies did anything to deserve it.”
“It was [Vladimir] Putin who engaged in that reckless action. Why should the energy companies be rewarded?”…
The tax would discourage companies from exercising “monopoly power” and induce them not to increase prices, he argued, and prevent largely foreign-owned resource companies from extracting money from Australia .
Stiglitz told reporters the windfall profits tax “seems to be politically difficult for this government”, suggesting companies “have a lot of influence”…
Later on Monday, Chalmers told reporters… “we’ve made it clear that a windfall tax is not something that we are considering… I had a long conversation with Joe Stiglitz about this this morning in my office. We’ve made our view clear on that for some time.”
The latest Queensland State Budget lifted coal royalties – effectively a super profits tax – “to ensure all Queenslanders receive a fair and appropriate return on the state’s valuable and limited natural resources”:
Since 1 October 2012, the highest marginal royalty rate applicable to Queensland coal royalties has been a rate of 15 per cent, payable on that part of the average price per tonne exceeding A$150.
Given the exceptional surge in coal prices experienced across 2021 and early 2022, with spot metallurgical coal prices reaching as high as around A$900 per tonne, the current royalty structure does not provide a fair return to Queenslanders during periods of such high prices.
To ensure Queenslanders receive a fair return on the use of the state’s valuable and limited natural resources in periods of high prices, the government is introducing 3 new tiers to the coal royalty structure, with effect for coal sold, disposed of or used on or after 1 July 2022:
- an additional tier with a rate of 20 per cent on that part of the average price per tonne that is more than A$175 but not more than A$225.
- a further tier with a rate of 30 per cent on that part of the average price per tonne that that is more than A$225 but not more than A$300.
- a further tier with a rate of 40 per cent on that part of the average price per tonne that is more than A$300.
This is estimated to generate additional royalty revenue of around $1.2 billion over the 4 years ending 2025–26. However, a substantial proportion (around $765 million) will be in 2022–23, as coal prices are expected to return to longer run prices over the next year…
The increased return to Queenslanders received during future periods of high prices will help enable the provision of essential infrastructure and services to meet the needs of Queenslanders across all regions of the state.
Rather than cowardly kowtowing to the energy cartel, Jim Chalmers should follow the Queensland Government’s lead and implement super profits taxes across Australia’s minerals industry in the upcoming federal budget.
Chalmers should also follow Queensland’s lead and unexpectedly announce the policy by stealth on Budget night. This would avoid giving the energy cartel and its captured business media time to mount a propaganda campaign similar to that launched against the Rudd Government’s mining super profits tax.
Sadly, following the Queensland Government’s policy lead would require political courage, which the Albanese Government sadly lacks. They seemingly prefer to look after the interests of a few multi-billion dollar foreign-owned energy companies than the interests of 20 million Australian voters.