Response To: What should be done with the mining tax?
The Mining Tax should be repealed.
Explainer by Gordon Young
Like it or not, mining is a major element of Australia's economy. The current boom has seen the industry become hugely influential to the wealth, prosperity and stability of Australia, and is often claimed to be a major reason Australia weathered the Global Financial Crisis better than most developed nations.
But as the boom leads to unprecedented profits for mining companies, debate has emerged over how much these resources are worth, who owns them, and whether they are being sold for their true value.
In 2010 the Rudd Labour government proposed a Resource Super Profits Tax (commonly known as the Mining Tax) in order to claim more of the mining profits for the Australian people.
This proposed tax led to enormous conflict. A backlash from mining industry groups, including an infamous advertising campaign and so-called Millionaires March in 2010, is considered a major factor in the toppling of Kevin Rudd as Prime Minister.
Following the re-election of the Labour government in coalition with Greens and independents, an amended Mining Tax was reintroduced in 2011. Passionate debate over the Minerals Resource Rent Tax has continued through the media, with Federal Treasurer Wayne Swan accusing mining magnates of perverting the democratic process. This resulted numerous counter-attacks, including from mining billionaire Clive Palmer and former Victorian Premier Jeff Kennett, which in turn brought more balanced discussions such as this one, from Economics Writer for The Sydney Morning Herald, Jessica Irvine.
This issue will be a major one for the 2013 Federal election. So what's Your View? Should the tax be repealed?
Some arguments FOR repealing the tax
- Low taxes encourage investment and job growth; high taxes will choke the mining industry and the secondary industries that depend on it.
- Australia's strong mining industry has largely protected us from the effects of the GFC. Weakening it now will make us vulnerable.
- Government lacks the capital to mine resources itself and cannot accept the potential risk of failure. Private investment is necessary for mining and should be encouraged.
- A stable mineral tax is necessary for market stability. Changing it can cause crashes due to loss of investor confidence.
- Mining companies have a right to profits they earn from sales - higher profits are not a reason to punish their success.
- Government is far less efficient than private industry and will waste a proportion of extra funds raised on bureaucracy.
Some arguments AGAINST repealing the tax
- Natural resources belong to the nation and all its citizens. These citizens should benefit from the full value of the minerals sold to miners.
- Current profits for mining companies are far too high to be considered fair – there is no risk of scaring away investment when profits are so high.
- Mined resources are finite and the current industry cannot be sustained. Money should be saved from mineral sales for when there are no more minerals left.
- There is little risk of miners abandoning Australia because taxes are too high as the minerals are fixed in Australia – there are no alternatives.
- Mining companies are often internationally owned so profits from the sale of Australian resources are currently flowing off-shore.
- The value of minerals should be determined by the market and sold to miners at that value, not taxed at a low fixed rate.
- The government can use funds raised for more ethical purposes in the public interest than mining companies.
Facts and figures of mining in Australia on Wikipedia
An analysis of the economics of Australian mining and the effects of the proposed tax by Greens Senator Larissa Waters, ABC.
A summary of the Minerals Resource Rent Tax on Wikipedia
Reaction to the passage of the Mining tax through parliament, on The World Today, ABC
A comparison between the originally proposed Resource Super Profits Tax, and the Mineral Resource Rent Tax, The Age
An account of Wayne Swan's attack on the influence of mining magnates, by Michelle Grattan, The Age
Author: Gordon Young
Gordon is a sustainability consultant, based in Melbourne. He is a graduate of RMIT's Bachelor of Social Science: Environment degree and is currently studying a Masters of Professional and Applied Ethics at Melbourne University. He also writes articles for the St James Ethics Centre and volunteers with the Environment Institute of Australia and New Zealand (EIANZ).
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