Wednesday, February 16, 2011

The mining super profits debacle

If we ever needed proof of how wrong the government was to back down over the resources super profits tax, we've got it today.

According to figures just released by the Treasury the backdown has cost us $60 billion over the next decade. We were going to get $99 billion, but thanks to the backdown we're actually getting $38.5 billion.

Then, as expected, today BHP Billiton has announced record profits of  $10.5 billion for the last six months, which is 72% up on the same period last year.

What an appalling decision the backdown was, and to me competely inexplicable.

The miners spent a few million dollars on a scare campaign making highly dubious claims, panic ensued, the government didn't bother to mount a counter campaign using the true facts but instead simply backed down.

They negotiated with the miners to see how much they were prepared to pay.

Government negotiating with taxpayers to see how much they're prepared to pay? When has that ever happened, until this disgraceful episode?

I've never been invited to join negotiations about how much tax I'd like to pay, have you?

Our resources are just that - ours. The miners are granted leases to dig them up and sell them. A reasonable profit is expected and acceptable. But these are unprecedented windfall profits.

And remember that these huge windfall profits are not the result of anything the miners are doing, it's all about the growth of China.

The resources are finite, which means future generations won't have them to produce wealth.  So what was, still is, needed is a tax on the excess profits which should be used to create a sovereign wealth fund.

That way our future generations can benefit from the resources we're so quickly depleting.

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