Mixed views on mining taxes

I had thought that the proposed resource super profits tax might be a political winner for the government, in a soak the rich sort of way. But this morning’s Nielsen poll reported in the Fairfax broadsheets suggested rather lukewarm support:

In a question which asked ‘Do you support or oppose a tax on the ‘super profits’ of mining companies?’, 47% were against and 44% were in favour. In this poll support for the ‘big new tax’ on shareholders in mining companies remains 14 percentage points behind support for the ‘big new new tax’ on people without dependent children and higher-income earners, aka the ETS. As is often the case, closely linking a tax to something the public supports helps it politically.

However Essential Research found another 8% of the electorate in favour of ‘higher taxes on the profits of large mining companies’, 52% approve, 34% disapprove, with a question that seems less framed to get a positive response than Nielsen’s (without the implication that there is something unfair about ‘super profits’). Perhaps a preceding statement about the Henry review gave the proposal some added credibility.

4 thoughts on “Mixed views on mining taxes

  1. A resource super profits tax is a better way to tax mining companies than royalties however I feel the tax kicks in too early. Take a look at this graph that I pulled from Peter Martin’s blog: http://3.bp.blogspot.com/_KbiBt2BFLiI/S-eST07q8zI/AAAAAAAABJk/MI_JfyC3CbI/s1600/effective+rate1.JPG

    The current system is really and truly terrible. It is regressive, which is silly when you want to encourage marginal and smaller operations. The new system peaks higher which isn’t intrinsically bad assuming the peak is manageable and it kicks in at the right time.

    Ultimately, I think the new framework is a step in the right direction and assuming the miners are able to lobby a bit with the rates and % of the tax during negotiation to make it more favourable to them, then I think it is a wise reform.


  2. Calling the ETS a “tax” may be politically expedient, but it’s not accurate. As a trading system it is simply a method of allocating a limited public resource (the maximum quantity of carbon dioxide emissions we collectively feel is wise) to the most economically efficient uses. It is no more a tax than the government auctioning of radio spectrum is.

    A Carbon Tax on the other hand, is exactly what it says on the tin.


  3. Caf – We had that debate earlier in the year. Technically, you have a point, but analytically I think it still functions as a tax – and the significant redistribution going on via the ETS and its associated ‘compensation’ package just highlights my point. At least with spectrum auctions, the costs are paid by all users of the service, and not a select few singled out by the state.


  4. I’m struggling to figure out the public reaction to this tax.

    Clearly its a much better tax structure for the mining industry. Its just haggling over price. Big miners coming out hard publicly puts them in a better negotiating position, so you can understand their reaction, and they do have a point about it being retroactive. And with the china boom, mining is set for a lot of good years, another great reason for the tax.

    But bombastic billionaires likening the government to communists and crying poor should go down badly with the public. And the government has clearly linked the mining tax as paying for a drop in the company tax, so it shouldn’t be a ‘big government’ issue. Even allowing for the WA public reaction, this shouldn’t be unpopular.

    I think we’ll look back on this like the battle on fringe benefit tax or the gold mining tax exemption, ie. why was there ever a debate, and the public will swing behind it. But hey, i’ve been wrong so far.


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