5 Apr 2014

Mining tax: it's time for all Australians to realise they are being ripped off

Australians are routinely being told that hefty mining taxes would hinder the country’s largest exports of coal and iron ore. This concern about the competitiveness of the industry has been the basis of the Abbott government’s drive to abolish the mining tax. However, it is hard to reconcile this view (key player Gina Rinehart, for example, claimed that Australia was “too expensive to do export orientated business”) with news this week that mining giant BHP Billiton recently increased its profits by 83% to US$8.1bn.
Within the last year alone, there has been a 20% increase in BHP Billiton’s Western Australian iron ore exports. In spite of this enormous growth, the company only paid US$29m in minerals resource rent tax (MRRT). As it stands, the tax is in no way making BHP uncompetitive – its bumper profits are a testament to that.
While mining companies such as BHP Billiton are making a motza, we need to be reminded that 83% of Australian mining operations are foreign owned. The net income balance – the difference between the profits of Australian investing overseas, and profits made by foreign companies in Australia – has suffered as a result of mining companies extracting greater amounts of Australian mineral wealth for foreign owners.
From 2003 to 2011, the net income balance reduced from minus 2% to - 6% of Australian GDP. In other words, Australia is being held at gun point by day light robbers.
Unlike Australia, Norway has kept their resource extraction wealth in their control without it fattening up a capitalist exploiting of finite mineral resources. Norway has a 78% tax on oil and gas revenues – unlike Australia, where the effective tax rate is a mere 13%.
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1 comment:

  1. Pal Haugerud, director general of the asset management in the department of the Norwegian ministry of finance, has explained Norway’s policy:

    It is a fund for future generations, both current and future. And that’s a responsibility for us to make sure that not only this generation, but also future generations get their fair share of the wealth because it is a one off. It is a transformation of wealth. We used to have wealth beyond the North Sea and now we are transferring that into financial assets.