Cargo cult GreenLabor tax idiots exposed now

Those of us downunder will know of the Rudd Labor Govts plans announced 3 May 2010 to introduce a Resource Super Profits Tax (RSPT). I commented on this in my three part series “Harming the Australian economy 101”, part two and three.
The main masterminds behind the RSPT – Ken Henry Treasury Secretary – Kevin Rudd Prime Minister (sacked on 24th June) – Wayne Swan Treasurer – all failed to realize that we do not have an isolated “Australian Economy” now – we are all part of the global economy. So the “cunning plan” (apologies to Baldrick) to milk extra tax money from the wealthy miners and give to their Labor constituents superannuation funds crashed in a heap during May and June as global markets simply moved investments out of Australia. Our resource sector market capitalisations crashed by $Billions post 3 May – and of course this has adversely affected every super fund holding resource shares – so natural market forces pretty much negated everything these GreenLabor geniuses were trying to do.
On 24 June PM Kevin Rudd was sacked by a coup d’etat initiated by unelected union officials working through a handfull of ex union Labor Senators. Our new PM is Julia Gillard who says she is getting things “back on track” – but of course Julia Gillard was Kevin Rudd’s loyal deputy for years and never raised an audible whisper of disquiet that KR policies were ever “off track” – so work all that out if you can.
Today’s news is that Julia Gillard has cut a deal with the big miners such that the new tax – which is now a “Minerals Resources Rent Tax” or MRRT – applies to coal and iron ore – affecting a few hundred companies including the BHP, Xstrata and RIO monsters – leaving in peace for the moment the thousands of battling explorers and miners looking for gold, copper, nickel etc.
Of course much of the damage done to the “thousands of battling explorers and miners” will not be undone on the ASX in the weeks and months ahead because once genies are out of bottles – it is usually impossible to fit them back in. The markets will will not assume that GreenLabor plans to tax the resource sector have completely gone away.

2 thoughts on “Cargo cult GreenLabor tax idiots exposed now”

  1. Peter Smith at Quadrant Online has a great article on the MRRT; (quoting the last few paras)
    The MTTR is better than the RSPT because it imposes less additional tax than would the RSPT. That is true. But has that now become the measure of success? It does less damage. Why do any damage at all? ‘If it ain’t broke don’t fix it’, should be stapled over the doorway of parliament house.
    Company taxes on profits apply to the mining industry as to other industries. In addition mining companies pay royalties. As minerals belong to the States, they decide the extent and type of royalty charges. Why think they will not act in their own best interests? Do we think that the heads of their treasury departments have less wit than the head of federal treasury? On recent evidence they may demur.
    Quite simply, the government has not made out a case for imposing additional taxes on the mining industry and has given every indication that it has not thought through the consequences. ‘A fairer share for all Australians’ is just empty sloganeering that could be applied to any industry at any time.
    The process for conjuring the MTTR out of the RSPT was also deeply flawed. Having failed to consult before announcing the RSPT, Gillard and Swan compounded their previous dereliction of good process by ‘negotiating’, and then only with the three largest miners.”
    and I would say if this Govt is re elected expect more of the same

    There are two things wrong with this. First, the other 300 plus mining companies impacted by the revised tax were left out in the cold. Second, the government has no business ‘negotiating’ an outcome with selected public companies. Consulting is one thing; negotiating quite another.

    Governments should to stand or fall on the taxation decisions they make. They should not enjoin private vested interests in those decisions through what amounts to making an offer that can’t be refused. This process is yet another sign of declining standards in public life matched, unsurprisingly, by an outcome that will damage Australia’s economy.

    Imposing materially higher taxes on a particular industry, as the MRRT would do, if it were enacted, will adversely affect that industry. It can’t do otherwise. Hands up anyone who thinks the government’s use of the revenue it would gain from the MRRT would be applied as productively as it would in the hands of the mining industry. Thought so, only those on my far left have their hands up.

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