What's yours is mine

4 May 2010 By John Foley Follow @johnsfoley

The proposed profits tax on miners makes more sense than the current system of fixed rents. It is just and could help dampen the industry’s extremes. As with most countercyclical regulation, the targets will hate it during the good times but be grateful during the bad.

This content is for Subscribers only

To access full Breakingviews.com content you must be a subscriber. Please use the following link to request a trial.

Context News

Australia's government has proposed a tax on "super profits" at mining groups that, if enacted in July 2012 as planned, would reduce profits for shareholders by 8 percent at the country's resources sector, according to Deutsche Bank estimates.

The Resources Super Profits Tax would create a "more appropriate return to the Australian community" from the recent increase in resource prices, the government said. It forecast a 7 percent increase in jobs as a result over the "long run".

Miners would be taxed at 40 percent on their operating profits, but losses and capital investment would be offset against future tax. The sum of carriedover allowances would increase by 6 percent a year to allow for the time value of money.

Miners would receive a rebate for the royalties paid to Australia's state governments, but would still pay corporation tax. That would be applied after the payment of the RSPT, and at a 28 percent rate, compared to the current 30 percent.

Prices of Australian iron ore on the spot market have doubled over the past year, while those of coal have risen by more than half. Mining contributed 18 percent of Australia's GDP over the past three years, according to BHP Billiton.

Email a friend

Please complete the form below.

Required fields *

What's yours is mine

This content is for Subscribers only

Existing Users Log In

Email a friend

Please complete the form below.