Let's say a mining company starts up with $8 million of capital which it invests in searching for raw materials.
Then let's say the mining firm generates $10 million of revenue.
Now let's minus $9 million of operating costs. That gives a gross profit of $1 million.
Then, under this new Super Profit tax, the mining company gets to earn a "normal" rate of return which is set at the 10 year government bond rate. For example, 6%.
6% of $8 million (the starting capital) is $480,000.
So, the mining company's net profit, is $1 million, less the $480,000 deduction which leaves a Super Profit of $520,000. This is taxed at 40%.
What a joke.
Apparently the government has now taken on the role of referee in deciding how much of a company's profit is socially and morally acceptable (and is taxed as regular profits).
They've then decided that any profits beyond this level must be a result of obscene greed and exploitation and should be taxed as 'super' profits.
Just the name chosen to describe these profits is laced with spin by implying these profits beyond a certain threshold are undeserved and therefore fair game for the government to plunder.
And who decides what that threshold should be?
Prime Minister Rudd has pinpointed the 10 year government bond rate as a satisfactory return to investors. Satisfactory to whom?
And to apply this tax to only the Resources sector is just contemptuous and short-sighted.
it's called communism and can be applied at whatever rate is decided upon depending on the side of the bed someone got out of that morning.
what you described is what happens in China.