With the government still hell bent on taxing the miners on whatbthey call, Super Profits, just what is a super profit.

There is a guy who goes out and values timber, mainly for the gas and power companies, so he can report back to them so they can work out compensation for effected land owners.

He has a car back pack, a can of paint, a tape, a GPS , computer, phone and a camera.

He makes, get this, $2375.00 PER DAY.

I know this as he has appraised my land.

His return on investment, 200 working days per year @2375= $475,000 per annum.

Investment, $100,000 tops. Annual return 200days per year, almost half a million.

Is this a super profit?

Then there are the banks, making billions on our money.

Are they super profits.

So what are super profits?

Superprofits are things that superannuation funds have no idea how to make, for a start.

But I do tend to agree that the notion of a 'super profit' is rather silly while all our governments continue to support very high salaries for CEOs and other individuals.

It was a typically low grade ALP throw back phrase to shop floor thinking.

Of course, the real problem is that we have a dodgy tax system that allows so many tax breaks, particularly for the wealthy and crafty, that allows them to weasel their way out of paying any/enough.

Instead of creating this silly concept, we should simply tax-without-escape those who earn income and profits, whatever they do.

A novel idea (for today) would be to have a progressive tax scale, more earned-more paid.

Someone earning a 'super' amount would pay a 'super' level of tax, whether they did the job you mention or run a mine, or run a milkbar, if that produced 'super' incomes.

How hard would that be?

Rudd and the ALP totally failed to sell this patch-up job and part of the problem was the very silly name they gave it.

Is Knlarmi still alive ask him or maybe Larry Pickering

A super profit works to ensure the owners of the resources share more fully in the largesse of the mining boom.

Why do you believe that the benefits of the mineral boom should not also be shared with the owners of the resources?

We are talking about large mining corps here not small mining companies, and getting value for money for resources.

No other business wholesaler would be content to sit back, in effect losing money, in the sector for which they supply the goods when everyone else in the chain is gaining more and more from the boom. That is business rehctub, from the primary source up.

The super profits tax is simply a way of sharing the benefits of the mining boom. We are talking SUPER profits here which still sees large mining companies making profits in the billions.

http://www.smh.com.au/business/bhp-profit-sparks-call-to-toughen-mining-tax-20110824-1jadw.html

KISS
define;..a super proffit
is anything over double the inflation rate
within the taxable season...not directly wage

ie other renumeration/gifts..bonus [income]

or any wage
that is more than 5 fold the worker average for that industry

or any industry..that has disparity
between their renumeration and the 'average wage'

ie only those abouve 'average wages'
most probably those getting over twice 'average wage'
or excessive 'income' return

we need a 'windfall bonus...tax'
and a transaction tax...capital gains tax

and a death duties tax..and a corperate tax..[that works to tax duties from dead corperations][who cant 'die'..

but who currently make life hell for the living...
wage slaves..peons..serfs..in their own god given land

we are all enjoined mortal heirs
of the erternal living good

[that we do did to the least
we do did tyo him]

Pelican, I understand and agree with everything you say.

But why not have a tax system that taxes properly in the first place.

Clearly, the states have trimmed off the 'profits' to 'we the people' in their usual race to the bottom, be that for timber or minerals, or landtax or death duties, so there is one area that should have been tightened up specifically for mining.

It still sounds really stupid- to be living in a capitalist (pretend) free market economy, where thieves are regarded as leaders and profits as gods to then be declaring there to be a 'super profit', unless you are the CEO who might tell the Board, 'We had a super year and with it a super profit' but I suspect that was not what Rudd had in mind.

By all means, tax profits, tax the theft of our minerals but be consistent.

Pelican, I have no problem in generating more tax from the minerals, none what so ever.

The mechanism is ther to do just that, it's called royalties.

If governments increased royalties, it would result in a better deal for the owners of the minerals, us. Why the new tax?

My thinking is that they won't do this as th likes of Qld and western A will get the lime share of this and those in th other states perish that thought.

Now NSW and Victoria have snow fields.

Do they share thier unique assett, or more so, it's rewards with the other states. No!

This option is there and can be implemented tomorrow.

To me it's a no brainer!

You have more hope of getting a super profits tax out of a bank than a royalty. That is where the difference is. Change mining for bank or any one else that makes obcene amounts of profit. A targeted tax, so where is the problem.

*We are talking SUPER profits here which still sees large mining companies making profits in the billions.*

Pelican, wether profits are in the billions or not, as nothing
to do with it. Its got to be in relation to capital employed.

Its going to take BHP something like 30 billion $ to develop
Olympic Dam.

Why should they not earn billions on that kind of investment?
After all, even your bank account pays 5% or so, with no risk
at all.

If they can't earn 10% after tax on their money, better to not
take the risk in the first place.

You can well claim that they are your minerals. So go wander around
the desert, trying to find them. Billions are lost each year, doing
exactly that.

If Govt is going to grab most of the profits, when they do find
minerals, there would be no good reason to spend money on exploration.
As it is now, Govt lands up with over 40% of
the profits, without any risk, just by putting their hand out.
Hardly reason for complaint

Yabby, your comment brings me back to my thoughts when this topic was first raised a year or more ago.

I said than, and I say now, if government wants a larger share of profits, then it is they who should. Pay for the exploration. Nothing found, no return.

The trouble is that now the miners are making big bucks, all of a sudden this government wants to get their grubby hands on it. Where were they hen coal was $35 per ton!

The true motivator for this logic in that this incompitent government has piss all ou money away, and some, and the miners are what they view as an easy target to get some back.

They won't dare touch the banks, as they know they can simply unplug the computers and hop on a boat to anywhere else.

They, the government are just cowards, not wanting to admit they have failed time an time again. They have caused more unrest and damage in four years than all other government have in my life time.

And 579, royalties are a state issue, that's why they don't want to go there because it won't plug the hole these fools have caused.

Yabby, if a company spends $30b (which I find hard to believe, frankly) then that is a cost isn't it?

But if they do spend $30b then they clearly expect a better return than the amateurs who run QANTAS, I'd have thought.

So there is no problem with taxing their actual profit, surely?

The rate might be a matter of continuing debate, I do agree, but not the actual idea of taxing them?

They'd have to earn a lot before $30b turned into profit.

The problem with royalties seems to be the eagerness with which all state governments rush to the bottom to reduce their ability to raise taxes, to appease greedy bastards and snub their noses at the vast voting public- sorry, no taxes so no roads, rail and hospitals, no schools, no public sector.

No state governments might be a goer.

*So there is no problem with taxing their actual profit, surely?*

TBC, there is no problem with taxing, there is a problem of the
rate. If Govts want most of the profits, why bother investing such
huge amounts in the first place?

For there is always a risk. A risk that commodity prices drop,
a risk of technical problems, etc. 30 billion$ invested at 6%
in the bank deposit book, could indeed be the far more profitable
option, with no risk.

Olypmic Dam is a huge project. Its going to take them 5 years just to
remove the soil and rock above the mined area.

The thing is, when Govts want more then half of all profits, without
taking any risks at all, sensible investors start to look elsewhere.
That is what the original super profits tax was doing, thus the
protest by the miners.

Anyone can go mining in Australia. Just take your multi million
$ drilling rig, head for the desert and drill away. Most of the time
you'll land up with nothing but expenses.Yet the moment you do find
something, some will want to take most of it off you. Hardly fair
in my book.

Miners dig holes in the ground for their own benefit. As for spending 30 billion on an infastructure job, i say there is more behind that than miners spending money. They are the first to screem when a road needs fixing, Iron ore and copper is being shipped 500 km's by road train, twice a day by each truck. There has got to be a lot of fat to do that.

The biggest whinger about the SPT is Andrew Forrester. It was revealed today that despite him being the richest man in Australia his company is yet to pay a single dollar of corporate tax.

To use a current vernacular, WTF?

Blue I could be wrong, but I get the idea you don't understand how this profit thing works. Not surprising really, if you were very good at it, they'd be paying you millions to hide it for them, to avoid super tax.

You don't go spend your $30b, get that back, then start paying taxes on your profits after that.

That $30b is capitalisation. It stays there. You start paying taxes on your profits from the moment you make any. So your income over operating costs, less any interest on borrowing, is taxed.

The miners do pay big taxes. If they make a couple of B, they would be paying half of that in various taxes. After paying dividends to share holders, [probably your super fund is one], they may retain $1/2b in retained profit to pay off borrowings, & fund future projects.

In a $30b project at that rate it would take 60 years to recoup the up front costs. That's assuming the price for their commodity holds up.

A bit over 20 years ago a mate of mine, a personal manager in the mining industry, thought his company would go under quite soon. They had granted high pay & incredible condition to their workers, in an earlier boom. He had no problem with this, he reckoned that to live in the ar's end of the world in a mining camp, you deserved it.

However South Africa was becoming big competition, & the Japs had screwed the price of coal so far down, they lost money on every ton. He was looking for a house to live in, when they closed.

Well another boom saved them, & made them rich. This allowed them to buy the best ulcer medication. They needed it.
Continued.

Continued
One of the main bitches with the mining tax is many believe thet a sweet heart deal has been done with the big 3 miners. It is believed that their size & clever accounting will allow them to hide much of their profit in interest payments.

Some would say good for them, but the smaller operators, [still bl00dy big to you & me] will not be able to do this. They believe their capitalisation will be destroyed, but the big blokes will get away scot free.

I have no idea. It is a long time now since I studied a balance sheet, & they give me a headache these days, but there are enough saying it for there to be more than a little truth in it.

If all those little miners shoot through, & the big blokes can avoid paying this "super" tax, all we will do is loose heaps of tax & jobs, while the idiot pollies smile at the camera.

Yabby
It is not a complaint about profits, that is what businesses are about, it is about sharing some of the largesse along the chain of production. Afterall taxpayers are footing the bill for infrastructure for these places for the most part and resources are worth something surely to their owners.

rehctub and Blue
I tend to agree with your comments in a general sense. In relation to the above statement to Yabby, if the goal is a more equitable (not equal) share of the boom a better taxation regime would be the ideal.

Royalties are good but how do we know what to charge a mining company until the profits are in. It would be unwise also to charge a very high royalty rate at the beginning if the business then failed to make reasonable profits. Maybe a basic royalty to start then adjusted according to profits, but then I don't see the difference other than in name, it would just be a different mechanism - same end.

On another front (digressing for a bit) there is far too much emphasis on mining and we are at risk of becoming too dependent on this income, ignoring the long term. There are also huge environmental impacts to be considered in the continual approval of new mines and damage to pristine areas such as the GBR. But that is another story I guess, but something to keep in context of the whole mining debate.

The miners already pay tax on profits, it's called company tax.

Now apart from company tax, they also generate millions, if not billion in the forms of GST and emplyees PAYG taxes, so they do pay tax. Do you really think it is smart to risk all this?

Now on the other hand, if governments said to miners, you invest your billions and we will give you a guaranteed return on investment of 12%, both on exploration and mining activities, I am sure most miners would jump at it, as most mining explorations result in failures.

Now of cause this would have to refer to new business only, as exploration is where the real risk is.

On my property alone, a CSG company is investing up to $10 million just to have a LOOK for gas. Now if they find it, that's great, wherever or not it's ready for extracting is another story.

The returns in CDG mining are huge, but come a distant second to the risks in exploration.

Royalties
It is my understanding these are applied at a set rate per ton.

Some mines are so low in productivity that they often make little to no profit once the royalties ar paid. Now if they were a percentage of the sale price, then they would rise and fall along with the markets. But that's just to easy.

Australian bureaucrats make super profits or what else can you call what they get for either doing nothing or helping other bureaucrats doing nothing. Teachers get a lot of pay for dumbing down our bright youngsters. Their super payouts border on super profit.

Pelican we have been dropping the top tax rates for years. At the same time we have been giving large handouts to the bottom end. Hawke & Keating were at it & did much of it. The poor middle lot, from a miserable $30 to $50 thousand have been picking up the load for everyone.

I would agree we went too far, with both top end wages & company tax, but can't you still hear Keating calling for lower company tax to attract investment.

I don't think there is any doubt we have far too many eggs in the mining basket. Country towns in mining areas are not prospering, they are being killed off quite quickly.

Please stop worrying about the Reef it is in no danger from us. If you add all the silt dredged in all Queensland harbours since settlement, to all the dirt moved in mining, it would not come near the silt that flows daily from the Fitzroy when it is in flood. It really is that little.

Add the Burdekin, the Burnett, the Mary & a few others, & you should see the picture.

If you are still worried you need to understand that for coral, the most deadly thing coming from land is fresh water. Coral can't survive in it.

To understand this look at a map of QLD, & the reef. Check the distance off shore of the coral, from 5 to 50 nautical miles, then look at the outfall of the rivers. You can see how the width of the coastal lagoon is matched by the amount of fresh water discharge from the nearby rivers. They have made room for our harbours.

This is complicated by the east coast current, & tides that can flood either northward or southward in areas just a few miles apart, but the picture is there.

The effect is even obvious in some mid ocean atoll lagoons. Heavy wet season rains can reduce the salinity of the water in the lagoon sufficiently to inhibit coral growth, while that on the outer face continues to flourish.

Here is my example of a super profit.

Just a few short years ago, Gold was around $400 an ounce. The miners whom pay the same royalties they always have, are now getting around $1800 an ounce.

Those "extra" super profits", supplied by the market, are not being shared with the Australian people regardless of which State the miners dig it up from Rehctub. Despite the fact that the actual mineral wealth belongs to all Australians regardless of which State the resource is located.

A smart business operator would, (as the source) of the commodity, be in error too not share in the increasing profits generated by his/her product, wouldn't they Rehctub.

*it is about sharing some of the largesse along the chain of production. Afterall taxpayers are footing the bill for infrastructure*

Pelican, I think you will find that BHP is by far Australia's
largest taxpayer, so aware of it or not, you benefit from their
largesse, its some of that money peed up against walls by Canberra.

As for infrastructure, BHP build their own ports and railways in the
NW. One of the big costs for Olympic Dam, is their own desalination
and pipeline for water. Most of these companies generate their
own power too. Perhaps the Federal Govt could start by building
a proper road in the NW. They cash in all the fuel taxes after all.
Now they are going to cash in on all the revenue from offshore gas too.

Rehctub, royalties on things like gold and iron ore already work
on a % basis in WA.

If you guys really want corportions to pay more tax, what about
honing in on companies like Google, who can transfer price most of
it out of Australia quite legally. Is our tax office fast asleep?

As to gold, what the miners tend to do is when the price of gold is
low, they only mine the richest ore bodies or even stop mining in
some mines. If the price of gold is high, they will focus on low
yielding orebodies which they would not bother about otherwise.
That extends the life of a mine dramatically. At 400$ an ounce,
a great many gold mines would simply close down, as they would
be losing money.

T2, the simple answer is royalties. Not a big new tax, just the tax that already exists, royalties.

Picture this, a multi million dollar advertising camp to sell the mining tax, or, a minimal cost to increase royalties.

Which one do you think makes more sence?

By all means share it around with the states, I don't care, just stop expecting the miners to pay additional taxes when times are good.

Digging something out of the ground at a total cost of $20 per ton and then on-selling it for around $280 tone is a pretty good profit, especially when there is negligible tax paid on that profit and much of the associated infrastructure (roads and rail) is paid for and maintained by those that actually do pay tax - is a pretty good deal and what I would consider somewhat excessive.

The tax rates paid have been essentially unchanged for many years and are based on a time when there much smaller profits.

That fact that such an industry nationally contributes only around 1% of jobs and less than 10% of the GDP is just a bonus (for them).

a super prophett

big business govt law medicine science and engeneering
has a requirment of an educated work force;;;;

the costs they need pay..for qualified workers..healthy workers..and respectfull neighbourly benificience,,would require their terms be fair,,,,not loot and run

for too long the one percent..has had acces to unlimited booty
the few collecting the bounty..[getting the cream..

they need to pay their way
and the way their way ends

no limited liability
no govt protection deals

fully accountable citisenry
who by unfortuinate prrceedances...
have not paid good care to the lawfull owners

we had kings and lords and ladies
and the peons..[the lawfully kept ignorant peasent...baa
{the great ignorant unwashed..consuming blue collar peasant/wage pig]

well enough no more lords/ladies..[lol kings giovenaer generals...presidents..primeminesters..yes minesters..nor lawyers

you stand condemmed by thy deeds/works..know we thee

its time to pay your way
or go back to go

Wobbles, where do you get $20 per ton from?

Also, are you aware of the risks involved in mining? I am talking on th exploration side.

Are you also aware that prior to the resources boom, it has been suggested that 19 out of 20 mining ventures failed.

Now if royalties were a percentage of the sale price, as they should be, it would mean that governments would be making an absolute fortune right now, due to the prices being fetched,however, as usual, governments, the ones who established the royalties in the first place, were simply to incompitent at the time to allow for such thinking.

Sound familiar!

Let's assume they were set at 5%.

This means coal at $35 per ton (where it was) would return $1.75 per ton to us.

At $130 per ton, we would now be fetching some $6.50 per ton and, we would not be having this debate.

Justbthink, they would even be in a position to have given some of the spoils back to the land owners whom they stole the assett from in the first place. But that's another issue all together, and one that's gaining momentum.

The I wish list!

...A tax by any name is a step closer to Nationalisation. Would our Tony support any activity that creeps into the “pure blue and misty heights” of the Liberal philosophy of “Carte Blanche” Privatisation?

...In view of the carnage of Global Economies, the time is ripe to Nationalise major profit making industries, while the theory of “Privatisation” is on its knees and exposed as the total rort it is!

A family of four is finding it hard living on excess of 150.000 / yr, can you believe that. $ 3,000 / wk + family payments.
If any venture has failed attempts, it is no good in govt hands. Imagine the cat calls, at spending money at failed attempts at making money. That is best left in private hands.

I do find it interesting that so many of you hate the wrong people.

That love to hate figure of old Joh is a perfect example. Now he knew how to get a bob out of the miners.

He let them build the railways they needed to get their coal to port, even smoothed the way for them to gain access through private property. What a con man.

But this was on condition that they gave the whole thing, lock stock, & rolling stock to us, via the Qld government. Great con man.

Then he charged them through the nose to carry their product on those railways. Incredible con man.

Who the hell needs a super tax, when you can make deals like that. As a thoroughgoing socialists he leaves the Labor lot for dead.

Oh, & did you notice what our Labor government did, after employing too many unionists, [sorry public servants] & going broke? Yes that's right, sold the whole thing back to the miners.

Stupidity comes in truck loads at times.

It is a rent.

For eg Westfield charge extra rent based on the profits of stores, This based on the fact Westfield have provided the environment that allows the profit to be made. The shop may make 200 a week in most locations so by being in Westfield they make $2000 a week, it is not their doing, it is Westfield that have provided the possibility of making an extra 1800 a week so will want half.

Miners did not provide the Pilbara for eg, it was there for them plus an environment that provides excellent investment options having low sovereign risk reducing interest rates. Also we provide workers and imigration to screen employees and overall are one of the most productive.

Plus it does not reduce profit, it shares it. So if I was investing 400,000 I would buy 1 full mine or 1/2 mine does not mean I get any less return on my investment. Same if you bought a house for $200,000 or went halves in one for $400,000.If houses go up 30% you still get 30%.

Same same same. Except if someone already owns a hosue for $400,000 and you say you want half the profit they may want some compensation for what they have already impoved on like a new kitchen etc and that was what the upset was over. Starting from scratch makes no difference to the investor, just a a partnership really.

Yabby
I am aware that companies already pay tax. It is about levels of tax based on the points I have made previously in terms of all players along the chain of production benefiting from increases in profits.

Peter Brain from the National Institute of Economic and Industry Research in the linked article states:

'Occasionally it is up to the governments to remind these companies they are the operators of resources at the behest of the Australian resident. Yes, BHP has got power, but basically they are the operators of Australian-owned resources, nominally owned by the residents. So it's up to governments to exert that fact.'

http://www.smh.com.au/business/enormous-clout-but-not-without-obligation-20110216-1awln.html

BHP is not going to leave Australian shores if the government institutes a better tax regime to that end. They are not stupid, BHP is a business, and billions of profit is still worthwhile pursuing even if there is an increase in the tax burden.

Hasbeen
It is not just about dredging but about increased ship activity and contaminated flows from the river system that affect the harbour. If it is not the dredging then it has to be something else causing the fish diseases. My stance is the truth should be revealed as a matter of urgency. Whether the outcome is beyond or within human control is yet to be determined. I will wait and see.

*BHP is not going to leave Australian shores if the government institutes a better tax regime to that end. They are not stupid, BHP is a business, and billions of profit is still worthwhile pursuing even if there is an increase in the tax burden.*

You are poorly informed, Pelican. Its not question of billions
dollars of profit. You can make them by putting your money in
fixed deposits at the bank. Its a question of net return on equity.

BHP has made it quite clear, that if Govt introduces new taxes
on the Olympic Dam project, they won't bother investing the 30
Billion $ required. Govts need to be reliable. They should say what
their plans are, before the company starts to spend money.

This is exactly what the whole drama was about with Rudd. He was
about to introduce extortion taxes retrospectively. It made Australia
look like a third world banana republic.

BHP might be an Australian company with a half a million Australian
shareholders, but it operates globally. From copper mines in Chile,
to a new potash venture in Canada, to deepsea oil drilling in the
Gulf of Mexico, they have various options for future investment.

If the greed of economic illiterates like the Greens means that the
company spends all the capital and takes all the risk, but the
Greens want most of the profits, well then frankly they would be
foolish to invest more in Australia, there are other options.

I think you'll find that if Gillard hadn't seen sense and repaired
the damage that Rudd caused, BHP would have taken their billions
and invested them elsewhere, to the detriment of Australia

"If the greed of economic illiterates like the Greens means that the
company spends all the capital and takes all the risk, but the
Greens want most of the profits,..............:) But Mr yabby....but what the human takes, it must be put back. If we all take from this earth, it will fail, and you know it. The greens are a form of balance that the greedy world knows just to well.

Yabby......you want to fire me up......go ahead.

You know the price as well as I do.

Your call...

CACTUS

*If we all take from this earth, it will fail, and you know it.*

Well then people had better stop breeding like rabbits, Cactus.

1.5 billion to 7 billion in 100 years, is not sustainable.

The last billion took just 12 years.

That has absolutaly nothing to do with the Greens. I have seen
no policy of there's which promotes family planning in the third
world. In fact, of the 4 billion a year in aid that we give away,
little or none goes to family planning.

Yabby
Well we are in agreement on overpopulation but we will have to disagree with the ethics behind a Super Profits Tax (even if by another name).

Technology alone is not going to remove the risk to environmental degradation through overpopulation and sharing of resources.

From memory the Howard Government did try and bring in Family Planning to the Third World but the Christian Lobby got on the band wagon and a deal with Harradine to get his vote one policy (think it was GST) meant some aid was cut on family planning and maternal health intiatives for the developing world

A super profit is a iron ore mining debenture in WA. We get very little value for commodity from iron ore. A super profit tax will claw back some of our country being exploited, until all the easy stuff is gone, then we will have to scrounge to find some.