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The Forum > Article Comments > Mining tax spreads wealth to 1% but Bolivia shows different path > Comments

Mining tax spreads wealth to 1% but Bolivia shows different path : Comments

By Fred Fuentes, published 27/3/2012

Minerals belong to all and can be used for the benefit of all.

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Your article is interesting, but Bolivia in the 1600s compared to Australia today is only relevant in the context that 'You can only own that which you can defend'. The concept that all natural resources 'belong to the people' is politically popular, but defies logic. If there is no incentive to discover and develop those resources, they will remain in the ground and no one will benefit. Clear and consistent rules of ownership and security of tenure will allow a country the prosperity to defend its citizens against predators. Another old adage says 'If goods don't cross borders, armies will'. Resource poor Japan went to war to gain resources. They lost the war but were, after the costly war, able to access those resources in peaceful trading.
Certainty in the rules is the name of the game. The clowns in Canberra have yet to grasp this fact and keep changing rules which are driven by polls rather than common sense. If mining companies, by expending money on exploration and technology hit a bonanza, why should they be punitively taxed? Applying the logic that all natural resources are the property of the people, if anyone trips over a gold nugget or finds it after lots of hard work, are they to then share it with the rest of the population? If someone wins the lottery, should they then compulsorily be forced to share it with everyone? A great old Italian engineer once told me, 'John, if all the money was taken from all the rich people in the country and given to all the poor people, the poor people would get $10 each'.
If Bolivia can give security of tenure to mining companies, at a price under which those companies can operate, that's fine. But waiting for a company to strike it rich and then changing the rules is a sure fire way to ensure the country, no matter how resource-rich, will either remain poor or be subject to an internal revolution or external invasion.

John McRobert
Posted by John McRobert, Tuesday, 27 March 2012 9:41:46 AM
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The bulk of the article is wild-eyed nonsense, and to make matters worse for the author he ignores elements of the tax story that he could have spun into a creditable argument for his side. I suspect this is because he doesn't know much about the issue.

Amazingly, the author has managed to portray a tax imposing billions of dollars of tax on mining companies as a win for the mining magnates, because there is supposed to be a tax cut and spending on infrastructure which directly aids the mining companies somewhere. He doesn't give details of either. This is not surprising as they don't exist.

a few doses of reality. First off, John McRoberts please note, minerals rights in Australia are owned by the government. The theory is that the government is imposing royalties on behalf of the people, so it doesn't count as a tax. Secondly, author please note, the resources royalties impost replaces a series of state resources imposts. So how much more are the mining companies paying over and above the previous state regimes?

Thirdly, and here is the bit that the author could have mounted an argument on, the tax only applies to coal, iron ore and petroleum (subject to another tax which hasn't changed), not to other minerals. That is an extraordinary emission partly resulting from the ham fisted way the Rudd government of the time tried to introduce the tax. This should be fixed up.

The author should revist his arguments.
Posted by Curmudgeon, Tuesday, 27 March 2012 10:36:37 AM
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