RSPT worked out example and Who is next to cop such tax?

[WinstonWolfe]

Hi WW

Not sure what you mean - State royalties still go to the States. It's just that the Feds rebate the miners for the cost, so in effect the Feds are paying the State royalties, courtesy of the new RSPT funds gleaned from the miners. So nothing changes for the States, other than a significantly diminished outlook for new projects

What's the bet the portion that goes to the States will be progressively eroded, just like gst distributions.

The last great direct revenue source for the states, will then be stamp duty and land tax.

This will be another major step towards centralized govt. Whether that's a good thing or not, will depend on whether absolute power corrupts moreso.

 

[Sunfish]

WW wrote:

You are absolutely right about the volatility of the income stream for the Feds though. For the Feds it could turn negative - they have to rebate the State royalties which are based on revenues and if the total profits aren't above 6% they won't have any money to do that with from the RSPT

All governments are tax junkies and any increased tax will quickly be committed long term. What WILL they do when the inevitable slump comes? They would be worse off than if they had simply lived within their means.

HE said:

The capital at risk in each project is eye watering, alongside the list of failed projects attempted by the likes of BHP.

This tax is on a project basis so BHP and RIO will be slugged on their bulk product exports. Will their equally super losses on the Ravensthorp Nickel and the Hot Briquetted Iron projects be offset against any super tax from other projects? My reading says no. Ergo there will be no incentive to take risks on benefication. Miners won't be keen about swallowing all the costs of failed projects and sharing the gains of the good ones.

 

[Rolf Latham]

Miners won't be keen about swallowing all the costs of failed projects and sharing the gains of the good ones.

Hey why not


we already have a few instances of corporatised profit and socialised loss.

maybe every time a miner makes a loss we can get the Feds to apply a $ 10 Ansett style levy to every tank of fuel or the like ??.......bugger, we already do that, maybe a dollar for every cubic metre of air inhaled ? Sounds dumb.....but perhaps no more long term dumb that whats been proposed.

on the one had we jack up taxes on smokes because it will stop people from smoking, yet doubling + taxes on mining wont reduce mining revenues..........of course not.

ta
rolf

 

[Sunfish]

on the one had we jack up taxes on smokes because it will stop people from smoking, yet doubling + taxes on mining wont reduce mining revenues..........of course not.

ta
rolf

I had no intention of watching the Mad Monk's reply but it wasn't so bad. He had a few gems like that. Maybe because he was reading he didn't repeat phrases as often as is the pollies' habit nor as many "Mr Speaker" utterances.

It was more the opening shot of the election campaign than a reply to the budget, but what the heck.

 

[topcropper]

mining doesn't produce anything, and it doesn't create value. all it does is digging stuff out of the ground and selling it, hence why it should be taxed through the roof, as stuff in the ground belongs to all australians

Wow! Amazing thinking. Working on this theory, I'd reckon agriculture produces nothing either. All it is, is growing stuff in the ground and selling it, And looking at what it consumes, fertilizer, machinery, fuel, etc, we'd be better off without it. I'd reckon then that both mining and agriculture doesn't produce anything then. Lets get rid of both then? Manufacturing is doomed, we know that. We only need the service industry. Australia, 100% services. We need more retail shops, coffee shops, real-estate agents, public service workers, woo hoo.

As to not creating value, mining is a primary industry. It's involved with digging the raw material from the ground. It's secondary industry that turns coking coal and iron ore into steel. If Australia can't do this on our own soil rather than sending coal and iron ore to China and having them do it, then get the steel sent back, then it's not minings or miners fault.


See ya's.

 

[oracle]

I believe the RSPT doesn't come into effect until after 2012, and after Tony Abbot's budget reply speech yesterday he clearly states Liberal party will oppose the bill in parliament and if it still gets passed when elected will rescind it.

So even if Rudd wins the next election and get the tax in there will be another election in 2013, hopefully by then liberals would have got their act together and might win then even if they lose this year. This means it might only be implemented for 1 year 2012-2013.

Cheers,
Oracle.

 

[steveadl]

mining doesn't produce anything, and it doesn't create value. all it does is digging stuff out of the ground and selling it, hence why it should be taxed through the roof, as stuff in the ground belongs to all australians

Mining doesn't create value? It's the most basic element of allowing society to function. Good luck getting any business to produce anything without mining being part of the chain to begin with.

So pulling the iron ore out of the ground doesn't count, but the blokes who then build an office tower with that material are creating value (or perhaps you'd like them to build a 40 storey office block out of wood!?)? Sorry don't get the logic on that, you don't get the second business without the first.

 

[Strannik]

Mining doesn't create value? It's the most basic element of allowing society to function. Good luck getting any business to produce anything without mining being part of the chain to begin with.

So pulling the iron ore out of the ground doesn't count, but the blokes who then build an office tower with that material are creating value (or perhaps you'd like them to build a 40 storey office block out of wood!?)? Sorry don't get the logic on that, you don't get the second business without the first.

it's true that mining is at the base of things.

but you didn't create any value by digging a tonne of ore out of the ground.
it has the same value as while it's in-ground. it's when you refined it - that's when you added the value to it.

 

[Strannik]

Wow! Amazing thinking. Working on this theory, I'd reckon agriculture produces nothing either. All it is, is growing stuff in the ground and selling it,

that's quite different.

with agriculture - you produce something out of virtually nothing
with mining - you just dig out what has been there for millions of years.

and speaking of agriculture, i don't think farmers enjoy the bulk of the profits made on their products. so why should the miners?

 

[Sunfish]

it has the same value as while it's in-ground. it's when you refined it - that's when you added the value to it.

So the trucky who gets TC's wheat from the farm to the mill contributes nothing. The wheat has not increased in value. Hang on! Wheat at the mill commands a higher price than when it was still on the farm but iron ore in a China port has no more use than when it had grass growing in it.

LUV ya logic.

 

[Rolf Latham]

The value and contribution proposition is a VERY slippery slope.

Often, the cost to get a resource to the first bit of cashflow can require decades of exploration and allied risk, and huge development and infrastructure.

An investor takes on those risks knowing that the outcome may be x, and the cashflows will be treated like y. Sure there is a sovereign and legislative risk............but conceptually I cant see a difference between introducing a new capital gains tax for residential property investors and the RSPT except for scale. After all both are a speculative investment and when things really fire, the profits can be real nice.............

Even better, if you get a wage rise above CPI, the portion above CPI could be taxed at twice your normal marginal rate, I mean after all, you wont miss what you didnt have.

I dont believe an additional tax on profit is the issue per se, its the level of the proposed tax and the assumption that it wont do a thing to the industry, the country in general, or Australia's future in attracting investment of any sort.

Now where did I put those bananas..........

ta
rolf

 

[Sunfish]

Strange post Rolf. I'm not even sure about your first line: The value and contribution proposition is a VERY slippery slope. I would be surprised if miners begrudged their hairdresser a profit. What they do resent is being demonised. There was a bumper sticker doing the rounds: Shut down the mines! Let the b*****s freeze in the dark

I cant see a difference between introducing a new capital gains tax for residential property investors and the RSPT except for scale. Here we are in total agreement. How does anyone own rental property in NSW?

Even better, if you get a wage rise above CPI, the portion above CPI could be taxed at twice your normal marginal rate, I mean after all, you wont miss what you didnt have. Public servants would be the biggest losers. 'Nough said.

The rest is roughly how I feel.

 

[steveadl]

True, for me the issue is not so much the figure itself (though as a business owner I do think it's extreme), but the fact that it will make Aust. less competitive for investment dollars. If every other major commodity country had the same tax rate it wouldn't be as much of an issue as we wouldn't lose any competitive edge. Regardless of what has been said by some, I do think it will have a big impact (in it's current proposed form) on whether major projects get a go ahead.

Plus I don't buy the whole "Aust has the commodities so the miners have no choice" argument. Whilst this is true long term, it can still stuff us up for the next 100yrs while there is still plenty to be dug up in Canada, Africa, South America etc.

I did read today that some believe Rudd & Swan are well aware of this however want it to slow down mine expansions so our economy doesn't overheat, not that they'd admit that publically.

 

[Sunfish]

I did read today that some believe Rudd & Swan are well aware of this however want it to slow down mine expansions so our economy doesn't overheat, not that they'd admit that publically.

The pollies are scared of the "Two speed economy" because most votes are NOT in Qld or WA.

It seems only a few years ago when the bankers ruled. How do City Bankers make a dollar? By screwing the provinces, that's how. Nobody proposed an Super Profits tax on Macquarie and BnB as I recall.

 

[WinstonWolfe]

Entering the realms of paranoia and conspiracy, maybe Rudd is trying to slow down the rate of growth of China, (and Western consumption) by throttling supply of raw materials.

The flow of western capital to China/Asia has to be stemmed, if the west want a chance of stopping vendor financing of their consumption.

However, I doubt Rudd thinks that far ahead.......He probably just wants more tax revenue to spend on The Climate Change Department, or more laptops for schools.

 

[Sunfish]

Entering the realms of paranoia and conspiracy, maybe Rudd is trying to slow down the rate of growth of China, (and Western consumption) by throttling supply of raw materials.

The flow of western capital to China/Asia has to be stemmed, if the west want a chance of stopping vendor financing of their consumption.

However, I doubt Rudd thinks that far ahead.......He probably just wants more tax revenue to spend on The Climate Change Department, or more laptops for schools.

Or 500 puters for the Climate Change Dept.

 

[Rolf Latham]

Strange post Rolf. I'm not even sure about your first line: The value and contribution proposition is a VERY slippery slope. I would be surprised if miners begrudged their hairdresser a profit. What they do resent is being demonised. There was a bumper sticker doing the rounds: Shut down the mines! Let the b*****s freeze in the dark


Ok, English isnt my first language, thats my xcuse and Im sticking to it

My point is that you cant compare the value and contribution to society per se of a miner without being aware of the inputs to start with. The folks that do the excavation work for a new CBD city block "arent adding value" to the hole, but without their input the thing wouldnt proceed.

My broking services add zero value on their own, but the end result helps others build wealth.

In reality, what industry does contribute and add value the most to the Australian Economy and Society? Mining and Agri would still have to be up there surely ?

I have an interest to declare. I havent always been a finance person

In my previous life I was an exploration and mining geo and also dabbled a little in oil and gas. I know just how much money you can spend with ZIP result


ta
rolf

 

[Sunfish]

Ok, English isnt my first language, thats my xcuse and Im sticking to it

Sorry Rolf. After all this time I should have picked up on that. My excuse is "oldtimers". LOL

 

[WinstonWolfe]

Ok, English isnt my first language, thats my xcuse and Im sticking to it

Sie wissen, viele große Worte für einen Deutschen.
Ich dachte, Sie müssen 4 Daumen bei der Arbeit Ihres Blackberry haben.

 

[Strannik]

So the trucky who gets TC's wheat from the farm to the mill contributes nothing. The wheat has not increased in value. Hang on! Wheat at the mill commands a higher price than when it was still on the farm but iron ore in a China port has no more use than when it had grass growing in it.

LUV ya logic.

the truckie provides a service
he certainly doesn't add value to the wheat, he just increases it's final cost
if one takes a tonne of wheat and lets it travel around the globe few times it doesn't mean that it suddenly has a higher value, it means that he is stupid and will sell it at a loss.

to give you an example which more people will understand - you can spend money doing reno on your property, but it won't necessarily add value to it, in fact it might decrease it.

one thing that people forget is that resources aren't renewable. so while we are allowing companies to get rich by digging them out and selling them, once they are gone we'll be left with nothing whereas the company will go on and dig somewhere else.

the whole reliance of our economy on resource trade is a dangerous thing in itself