The net result of the recent heated debate in Australia over whether mining companies should pay considerably more tax, led to the ousting of the prime minister after millions of dollars were subscribed to a high-profile advertising campaign by the big mining companies (Anglo-Australian entities such as BHP Billiton, Rio Tinto and Xstrata chief among them).
This was backed by real, or vacuous threats, to quit the country’s shores – or at least withdraw from some key projects.
In fact, none of the companies have made concrete moves to do so, while investors’ confidence in the industry, over the past 2 months, hasn’t appeared to be significantly dented. Although Australia’s fiscal policy has been in disarray for some time – not least following the September 2008 meltdown – the country is still the world’s biggest supplier of coking coal, alumina, lead and iron ore –  the three global giants would have cut off big chunks of their noses, had they actually followed through on their threats.
The compromise measures, now apparently agreed between miners and government, are in some respects not significantly different from the discredited “Super Profits” tax, except insofar as applying a tax rate of 30%, as opposed to 40%, charging at a lower “trigger point”, and with fewer companies subject to the new measures.
The new tax will be called a “Resource Rent” – a well-worn concept, no doubt calculated to provoke far less anxiety than the spectre of companies ripping off the state and people and walking away with billions off ill-gotten gains.
In reality, however, while the former proposal was estimated to recoup Aus$12 billion in revenue for the government by 2012, the revised taxation regime is likely to garner only a little less (around Aus$10-11 billion).
Mind you, there’s quite a lot to which the “missing” billion might have gone. Not least in increased dues to the Aboriginal communities who have had to sacrifice an increasing amount of their territory and resources to mining over the past 25 years.
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Fortescue says new mining law favours multi-nationals
Australia’s watered down tax on mining profits favours multi-nationals and diversified commodity producers at the expense of smaller companies, iron ore miner Fortescue Metals told a government hearing.