RR Phantom
Location : Wasted Space
Job/hobbies : Cayman Islands Actuary
 |  Subject: Idiots: OZschwitz economists back mining tax, claim it's 'an effective economic strategy'  Wed May 26, 2010 5:22 am | |
| A group of 20 leading academics and economists has backed the Rudd government's proposed mining tax, saying the sector should fork over more of its profits.
The group, including the former chairman of the Australian Competition and Consumer Commission Allan Fels, issued a statement on Wednesday supporting the proposal to claw back 40 per cent of mining's super profits.
They say the ongoing debate over the tax has been dominated by misinformation.
But they agree it is still appropriate for the big miners and government to negotiate the finer details.
"Mining is different to other industries in that it uses and depletes natural resources," the group's statement said.
"Some return on those resources should flow to the Australian public.
"The existing royalty system reflects the fact that it is desirable to levy a charge for access to publicly-owned mineral resources, in addition to normal corporate income tax."
The group said the move was consistent with effective economic strategy.
"They (the miners) are paying the wrong kind of tax," Dr Fels told ABC Radio.
"Having royalties on production actually deters production."
The University of Queensland’s John Quiggin was critical of the federal opposition’s stance on the tax, especially claims it would lead to higher food costs.
‘‘That’s about the least defensible,’’ he said.‘‘There’s no reason at all to think that the tax is going to affect the world price of these minerals, and therefore that that’s going to feed in any way into Australian consumer prices.
‘‘It certainly is depressing to see this kind of scare tactic put up, it really is just distorting the debate.’’
The group won backing for a bigger tax on profits from the Minerals Council of Australia.
‘‘The concept’s fine, we agree with the economists that the concept’s fine,’’ chief executive Mitch Hooke told ABC Television, adding the council put a profits-based tax system on the table during the Henry tax review process.
The council’s beef with the government was with ‘‘the practical implementation’’ and design of the resources super profits tax.
Mr Hooke accused the government of rejecting mining industry overtures for genuine consultation on the tax.
‘‘It’s a bit rich to be out there saying they want to consult with us now and then limiting the nature of those consultations.’’
The government has ruled out giving ground on the 40 per cent level or rate at which it cuts in.
Mr Hooke said miners and the government were a ‘‘fair way away unfortunately’’ from reaching an agreement on the tax.
He took aim at Labor’s approach, saying he had never seen any government in his 20 years’ experience in Canberra ‘‘pontificating from the mountain top’’ without consultation with industry.
Finance Minister Lindsay Tanner rejected Mr Hooke’s criticism describing it as ‘‘total nonsense’’.
‘‘Mitchell would say that, wouldn’t he?’’ he told ABC Television.
Mr Tanner said the government was unlikely to reach agreement with the entire mining sector on any point.
‘‘There’s lots of different kinds of companies, some of them actually benefit from our proposals.
‘‘I don’t think we’re going to get the whole sector to sign up ... no matter what.’’
Mr Tanner said the consultation process was not like a negotiation between an employer and a union.
‘‘This is the government of Australia, and the parliament of Australia making decisions about Australia’s tax system.
‘‘We are negotiating about detail, but this is not about some kind of deal behind closed doors with the resources sector.’’
Independent senator Nick Xenophon said the tax needs a lot more tweaking before it benefits all Australians, especially the interests of small miners.
‘‘The government should be listening to those small emerging miners as much as, if not more than, the big miners,’’ he told reporters in Canberra.
‘‘But the industry should pay more, without killing the goose that lays the golden eggs.’’
Nationals Senate leader Barnaby Joyce openly dismissed the open letter.
‘‘It wouldn’t be surprising in a globe of about six billion people that you could find a few people to support the mining tax,’’ he said.
The government was ‘‘mad’’ to impose a greater levy on the industry in a time of on-going global financial concerns.
‘‘The biggest issues coming before us is the global sovereign crisis - which is something by the way I was mocked for talking about earlier on - but it’s here now,’’ he said.
He told Prime Minister Kevin Rudd to take a ‘‘sanity pill’’ and reconsider the tax.
Treasurer Wayne Swan was clearly thrilled that a group of 20 academics and economists had publicly backed Labor’s proposed tax.
‘‘They see very clearly that replacing a royalty regime with a profits-based tax is squarely in the national interest,’’ he told reporters in Canberra.
Mr Swan took aim at Opposition Leader Tony Abbott for suggesting miners paid too much tax.
‘‘This morning you had the extraordinary statement on radio from Mr Abbott that the miners were paying too much tax,’’ he said.
‘‘Not even the miners believe they are paying too much tax.’’
Mr Abbott told Macquarie Radio this morning that ‘‘any fair-minded analysis’’ would suggest that mining companies were paying more than their fair share of tax ‘‘when you throw in corporate tax and royalties’’.
‘‘And yet, because it suits the political purposes of this government, they’re being blackguarded up hill and down dale,’’ he said.
Mr Swan refused to rule out a compromise on the cut-in rate for the tax, which is set to apply on profits above the bond rate.
‘‘(But) I can tell you this - the government is absolutely committed to putting in place a resource super-profits tax of 40 per cent.’’
Mr Swan rejected criticism the mining industry had not been consulted before the tax was announced, saying it was a ‘‘furphy’’.
‘‘The independent (Henry) tax inquiry had extensive consultations with the mining industry before they completed their report.’’
LNK
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