Mining taxes anyone?

This article is cross-posted at Peter Rohde’s Blog.

The Mineral Resource Rent Tax (MRRT), aka the Mining Tax, is a big issue in Australia lately. For the non-Australian readers, this is a tax on non-renewable resources that are exploited by the mining industry on Australian territory. Most people from my side of politics vehemently oppose the Mining Tax, criticising it as “yet another tax”. If it is indeed yet another tax, then I certainly fit into the category of not wanting additional taxes. However, if it is a replacement for other taxes – notably income tax or company tax – while remaining revenue neutral (i.e. the total tax burden hasn’t increased) then I would strongly support such a tax.

To justify this position, let’s consider why taxes on companies in general are bad. In a globalised economy, it is very easy for businesses to shuffle around on the world stage. If company tax is too high in Australia, companies will begin moving offshore and we miss out on their jobs, productivity and tax contribution altogether. It is the fluidity of commerce in the globalised era that stipulates we must remain competitive by keeping company taxes to a minimum. This is a philosophy with which I very strongly agree.

Companies exploiting non-renewable resources are somewhat different however. These companies make their profit by digging up and processing what’s under the ground. Unlike other forms of business, what’s under the ground doesn’t and can’t get up and move to the other side of the world – it remains under the ground on Australian territory, irrespective of government policy. While it’s true that excessive taxation on the mining sector might undermine companies’ incentive to exploit our natural resources, who might instead turn to reserves in other countries, this isn’t nearly as big a disincentive as company tax on the non-mining sector, where business operations are much more dynamic and can much more readily cease their operations here and resume somewhere else – the options for mining coal in other countries are much more limited than the options for running a tech startup.

So, do I support more taxation? No. But do I support introducing a mining tax if we are spending every cent of the additional revenue to offset taxes on non-mining companies? Absolutely. The question to me isn’t “should we have more taxation?”. I presume everyone knows where I stand on that issue. To me the question is “some level of taxation is necessary, so what method of applying it has the least adverse impact on the economy?”. Thus, if presented with the question “should we have higher company taxes and no mining tax, or a lower company tax with a mining tax, but with the same net level of tax revenue?”, my answer is squarely that a mining tax is the way to go.

I believe both sides of politics in Australia are arguing for and against the mining tax in the wrong way. If the government were to sell the mining tax using the logic I just presented, I think many more conservative/Liberal voters would see the sense in a mining tax. Small business, which makes up a significant conservative voter base, and a substantial fraction of the economy, would be attracted to the idea of a lower company tax.

It is frequently argued in the media that the Mining Tax will drive away investment in Australia. No doubt this is true. But if it were used to offset other company taxes, the flip side of the coin would be that it would attract investment in other sectors which are more dynamic. Unfortunately the level of political debate in the country is rather low and this issue is being argued by the media in a very simplistic manner – as is the norm in the Australian media these days (I’ll save my issues with the media for a future post).

Trampling farmer’s rights to protect farmland from CSG.

“The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’- 
Ronald Reagan

Several days ago here in a post, “Protecting cropping land from mining, and farmers” I mentioned some of the nasties that were included in a Draft State Planning Policy for Strategic Cropping Land.  A number of normal farming activities would be removed from local control and be subject to central government decisions.

Dale Stiler from ‘Just Grounds’ has sent in a link, which makes it clear that this is a whole lot more serious than the issues raised before. Now it appears that an incredible number of activities that farmers could be expected to carry out in the pursuit of diversification, will be illegal on land that is designated “Strategic cropping land.”

The National Farmers Federation is skeptical as to the degree of protection afforded, and Carbon Sense Coalition chairman Viv Forbes, has found serious problems in the draught: 

Carbon Sense Coalition chairman Viv Forbes said the policy would stop farmers subdividing their land.

“Any other developments on their blighted land will be banned or difficult,” Mr Forbes said.  “Imagine the obstacles should they want to develop a racehorse stud, a feedlot, a new house or a private forest?” he said.

“Farmers will be condemned to be pastoral peasants on cropping land controlled forever, paddock by paddock, by an anti-farming, anti-mining bureaucracy.  Continue reading

Carbon tax “compensation”

This is an analysis of the income tax compensation offered under Labor’s proposed carbon tax.

Firstly, lets have a look at the 2010-2011 tax brackets, taking into account the LITO (Low Income Tax Offset):

Bracket 2010-2011 Rate
$0-$16000 0%
$16000-$30000 15%
$30000-$37000 19%
$37000-$67500 34%
$67500-$80000 30%
$80000-$180000 37%
$180000- 45%

Lets have a look at the proposed 2012-2013 rates, again, taking into account the LITO, which has now been reduced from $1500 to $445, and had it’s withdrawal rate reduced from 4% over $30000 to 1.5% over $37000.

Bracket 2012-2013 Rate
$0-$20542 0%
$20542-$37000 19%
$37000-$66667 34%
$66667-$80000 32.5%
$80000-$180000 37%
$180000- 45%

Continue reading

Damn you Al Gore, now we’re all going to die.

Al as you all probably know invented the Internet, or at least claims to have done so, or maybe it’s an urban legend he has somehow not gotten around to correcting.

In the ultimate case of the application of the law of unintended consequences it is now claimed that in the process he has doomed humanity and all furry and cuddly critters to extinction.

For those of you are probably going to dismiss such a claim as rubbish, you will find that you are on the wrong track. Try to use the logic, (or what passes for it) of the climate tragics who see doom at every turn.

Lets face it, in the good old days before Big Al unleashed the power of the net on an unsuspecting left, if you had the politicians eying off a new source of plunder, (check), the media in the bag, (check), and a large body of scientists on government grants to prove your disaster scenario, (check), you had it made. If some idiot had contrary evidence, it didn’t matter; nobody was going to hear about it anyway.

Richard Glover in the Sydney Morning Herald is on to it though. The Internet is allowing the unwashed hordes who don’t even read Dostoevsky to express their ignorant and dangerous views for all to see. Worse still, there is no one out there to counter their outrageous claims.  Continue reading