Vanguard May 2013
The Mineral Resource Rent Tax (MRRT) has hardly put a dent in the profits of the mining monopolies, raising a mere $126 million in the first six months rather than the $2 billion forecast by the government.
his was no great surprise, considering the loopholes and concessions granted to the big mining companies BHP Billiton, Rio Tinto and Xstrata in the initial negotiations after Gillard had elbowed out Rudd and his Resource Super Profits Tax.
For example, the tax only applies to the mining of iron ore and coal, while other minerals such as gold, nickel and uranium are exempt.
It applies to only 30% of ‘assessable profits’ which are further reduced by ‘deductible expenditure’ and a special MRRT allowance set at the long term government bond rate plus 7%. There is also a 25% ‘extraction allowance’ and state royalties are yet another deduction. The final watered down MRRT payment then becomes a deduction from assessable company income tax.
State governments in Western Australia and Queensland were given the incentive to raise their royalties, reducing the federal government share even further.
This month, the week before the federal budget is released, a Senate inquiry will report back on the effectiveness of the MRRT. Several interesting bits have emerged from the submissions already made.
Treasury Secretary Martin Parkinson stated that while the Treasury had adjusted forecasts to take account of a rising Australian dollar, falling commodity prices, and increased state royalties, it had little idea of the actual amounts the companies were depreciating their assets. “… we actually won't be able to get to grips with what's actually happened until we either complete conversions with the industry or ... the end of the financial year is completed and the firms have themselves put in their tax returns.”
How pathetic is this! The national government allows a swag of foreign and local monopolies to grab Australia’s most valuable resources on the cheap, and doesn’t even know how many (or few) dollars it can collect from its grubby dealings!
Even the Association of Mining and Exploration Companies argued that the tax was ''ill-conceived as it was the direct result of a private and secret consultation process with three large multinational companies''.
In his submission Western Australian Greens Senator Scott Ludlam made some good points, “Let's get one thing straight – these mineral resources belong to the Australian public, yet the companies that plunder them pay an average of 13.9% company tax and are 80% foreign owned.
“80% of the shareholders of the major mining companies operating in Australia are not Australians, so who is benefitting from these publicly-owned resources?
"The mining boom is shovelling vast profits out of the country. While the mining sector accounts for one fifth of company profits, it only pays one tenth of the company tax take. The original Ken Henry super profits mining tax could have harnessed the boom to deliver a sovereign wealth fund and much needed infrastructure and services for the Australian people. Instead, Labor's watered-down version has barely scratched the surface of the mountain of profits, while the Coalition would have had no super profits tax whatsoever.”
Immediate Demands of the CPA (M-L)
- Stop nation-wrecking by multinationals – nationalise and build the nation for the people!
- Regulate and control foreign investment - reject unequal “free trade” deals!
- Tax the profits of the mining monopolies! Keep the wealth in Australia!
- Develop renewable energy production
- Build clean, safe, sustainable manufacturing and value-adding industries
- Improve services and amenities in mining communities and regional areas