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The Forum > Article Comments > Super profits tax is a just impost on miners > Comments

Super profits tax is a just impost on miners : Comments

By Gavin Mooney and Colin Penter, published 14/5/2010

Mining companies are granted privileged access to resources owned by the Australian people. They should be taxed.

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Point of information: What are excess profits? How are they determined? The article doesn't say.
Posted by david f, Friday, 14 May 2010 1:20:27 PM
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Excess profits are those above the level of normal profits where normal profits are those that are earned in a competitive market. There can clearly be debate about the quantification of what in this context is normal and hence what is excess but no debate that there are excess profits.

Gavin and Colin
Posted by guy, Friday, 14 May 2010 1:33:13 PM
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Let's put it in perspective. Last year BHP had revenues of $62 billion and a net profit of $7.2 billion. Of this $7.2 billion, about $4 billion was re-invested in mining and $3 billion went to shareholders as dividends. Sixty percent of the dividends went to Australians, mostly Super Funds.

Of $62 billion in revenue, $59 billion is spent on mining operations and development and government taxes. In other words, $59 billion is pumped directly into the economy and $2 billion goes to retirement savings as Superfund Income and 1 billion goes to overseas investors. This is why it is called the goose that lays the golden egg. Why would you want to kill it.
Posted by Wattle, Friday, 14 May 2010 2:01:04 PM
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I really know about the theory of excess profits. I am asking what is the percentage above which profits are considered excess. How has the government determined this percentage? What is the percentage, and how has it been determined? Number, please.
Posted by david f, Friday, 14 May 2010 2:07:02 PM
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The mining companies are gouging up our earth that is full of the minerals that are ours and taking them off elsewhere for industries. In this way they create wealth for other countries and fforeign investors. Some Australian investors do OK by this arrangement but whaat's so wrong about redistributing some of that wealth that is generated to other Aussies. We've been hung out to dry by these bloody leeches long enough, havent we ? And dont tell me these multi-nationals will suddenly go broke giving us all a fair go.

socratease
Posted by socratease, Friday, 14 May 2010 2:29:21 PM
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While it has to be acknowledged that there is more than a little hot-air rhetoric doing the rounds on this tax, this is hardly a balanced view of the topic.

Which is a pity, because it is set to be a major factor in the upcoming election. If we continue to conduct the debate at this level of stratospheric emotion, no-one will benefit.

The authors do a good job of sticking a pin into the ballooning chicken-littlery of the miners, but then fall at the first fence in their response (my entry for mixed-metaphor-of-the-month).

"Letís put this in some sort of perspective. Mining companies are granted privileged and exclusive access to resources that are owned by the Australian people. That is the source of their excess profits"

Oh, puhleeeze.

"Privileged and exclusive access to resources?"

The "privilege" is that you allow them unlimited license to spend as much as they like digging holes.

The "exclusive access" is also to the dirt they dig up before they find anything.

The "resources that are owned by the Australian people" have, let me gently suggest, a vastly different value when they are above ground and shipped off to China, than when they remain below ground, untouched by those horrid greedy miners.

Clearly, the authors subscribe to the view that while investment by the private sector should be encouraged, decisions as to the value of that investment should be decided retrospectively, and arbitrarily, by the government.

That is not particularly conducive to a private sector opening their wallets and rushing off to do their bit for the Australian economy, now is it?

But this is the real stunner.

>>There can clearly be debate about the quantification of what in this context is normal and hence what is excess but no debate that there are excess profits.<<

So... there's "no debate" that they're excess.

But at the same time, there's no definition of what is excess.

George Orwell described this as "doublethink".

The ability to hold two conflicting views as simultaneously viable.
Posted by Pericles, Friday, 14 May 2010 2:30:24 PM
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