While watching weekend agenda, Mr Alb, while defending the MRRT repeatedly said, all labor wanted was for the big miners 'to pay their fair share' of tax.

So what is 'their fair share' I ask.

Does he and his colleagues feel the banks are paying their fair share?

Or, do they feel the many thousands of people, selling at markets all over the country, every weekend, are paying their fair share of tax?

Or what about the banks, or the likes of ,Telstra, who by the very nature of 'outsourcing work' to the likes of India, are they paying their fair share?

At least the miners are employing people here in Oz and they are all generating incomes, who in turn generate incomes for many in the community, all of which pay tax at applicable rates, as set by the governments.

So I ask Mr Alb and the labor party.

What do you consider to be a 'fair share' when it comes to paying tax?

Rechtub please assist me, some time ago a miserable beggar put up threads telling us back packers are not paying tax.
Taking our jobs, enjoying our sunshine and riping the tax system off.
Now these big mining company's, saints every one of them Lord bless them all.
Digging holes and removing all that stuff!
And guess what?
Some beggar wants them to contribute!get a stick and chase em under the veranda!
Why? they leave the holes for us!
A tax on super profits is less than it is worth to our country.
Rudd's return was brave and about right.

Belly, last time I looked, the miners were paying royalties.

Now if these royalties are wrong, then is that the fault of the miners?

It's not so much the tax I am talking about here, so much as the words 'fair share'.

Mining companies not only pay tax, they also generate millions, if not billions in tax, with those they employ, contractors they engage and support businesses they support.

In fact, where I invested some 8 years ago, land has increased from $7,500 per lot, to $240,000 per lot.

I assume the tax has also increased (stamp duty).

Houses from $60,000 to $400,000, more tax.

When their share price increases, or their dividends increase, guess what, the recipient pays more tax.

So I say again, if the tax they now pa is unfair, wha is their fair share and, why are others exempt from this, especially the likes of Telstra, who takes their business elsewhere at every oportunity.

Care to enlighten little ol I'll informed me!

If I were share farming someone's land the landlord would receive 18-20% of the gross production. And I'd be expected(rightly) to maintain or improve it's productive capability.

If indeed this was a valid comparison with mining, the mining industry should consider itself getting off lightly with the typical 8% or less royalty payment - without the question of resource sustainability.

So why do mining co; need subsidized fuel.
With Gina collecting one mill / hour, she needs a tax break, according to sum.
Mining has a capacity to pay, just as China has a capacity to pay.
Mining has raped the east of skilled employees, so there is an even bigger reason for them to pay.
To slow mining would be beneficial to us all.

Nothing so far as tax is concerned would be more fair than a flat tax !

So you think that it's ok for mining companies, who are 83% foreign owned, to continue paying only 14% company tax. The banking sector pays double that.

Of course they should be paying royalties, they need to buy what they are digging up. That is completely separate from paying tax. You don't excuse a retailer his taxes because he had to pay for his stock, so why would you be doing that for miners?

Remember, of the $51 billion of mining profits in 2009/2010, $42billion accrued to foreign investors. And they shouldn't paying be more than 14% tax? Meanwhile Australian businesses earning much less are paying much more.

Further, the mining sector only employs about 220,000 workers, not much more than the banking sector (which pays 30% corporate tax). They don't provide as many jobs as they'd have you believe. Manufacturing employs about 1 million, Retail closer to 1.5 million.

So, to put it bluntly, the mining sector is paying less than its fair share and therefore should pay more.

David,

Please explain your assertion that mining companies pay 14% tax.

Welcome David and your task in answering the question asked of you will take little effort.
We may some times clash but I welcome informed comment such as yours.
A rare event in threads such as this

Simply dividing the tax paid, into the gross income produced is. OT how the system works.

I too am curious how David comes to his conclusion that miners pay 14% tax.

Is that 14% after deductions I wonder.

It's easy to miss represent figures.

As for foreign investors, they don't get a share of the royalties and, the shares they buy are there for all to buy.

We just choose not to take the risk.

They do, and deserve the returns for doing so, as they own part of the company and they also share in the losses.

We simply want a larger share but without the risk.

Sorry, it doesn't work that way.

"The mining industry pays corporate tax like every other industry. However, the average rate of corporate tax paid by the mining industry in 2008-09 was 13.9 per cent, substantially below the theoretical 30 per cent tax rate. One reason for this is the generous tax deductions available to the mining industry, particularly in relation to research and development and accelerated depreciation provisions for capital expenditure."

-the Australia Institute, "Mining the truth", September 2011

Fortescue Metals had never paid ANY Corporate Tax until this year because of clever manipulation of these tax breaks/deductions.

14% is not sufficient tax on companies making massive profits from Australian resources. The tax breaks are fair as they encourage investment and not all mining companies are making super profits. But those that are should pay a fairer share of tax, like the rest of us.

The Religion Industry pays no tax whatsoever, and they too should pay their 'fair share'.

What amounts to a fair share is an important discussion though, for miners, for corporations, for individuals, for everyone.

Of course, if the world was serious about taxes and crime, the tax havens of the world would be closed down, and the Swiss system of hiding crimminal wealth would be exposed for what it was, an aid to human rights abuses and common crime of high order.

As for mining royalties, well, as always, state governments and our foolish politicians enjoy nothing better than a race to the bottom with each other, so instead of increasing royalties, they have been busy reducing them, or at least not increasing them in line with the increased value of the product.

The folly of people like Crean on Q&A telling those people in regional Oz that they had to 'earn their way' to a bypass and needed to get private industry in to build it was typical of the present attitude of all politicians.

You'd think that the ALP would be able to clearly articulate the link between taxes and services, but they are so intent on being the LNP that they no longer have any idea what they were elected to do.

David see? you speak the whole and absolute truth.
Rechtub has no wish to hear or understand , the question asker too is comfortable throwing rocks, not haveing truth returned.
TBC I think remains a green, but thinks rather than see your truth watering it down, by diversion,is a plan.
Before some comment on tax's mining carbon or any, they should arm them selves with the facts.
Kerry Packer, in my view speaking for most rich Australians said these words at a Parliament inquiry.
* any one who does not try to pay as little tax as he has to is insane*
Rich people are rarely insane, ok yes I forgot, except Palmer!

*14% is not sufficient tax on companies making massive profits from Australian resources.*

Well they are not just paying 14% tax. They are making siginficant
investments into new mining developments, which are of course
deductible as legitimate business expenditure, as they should be.

If you want BHP to spend 25 billion to develop a venture such as
Olympic Dam, you can hardly expect that investment not to be tax
deductible. The difference with mining and other industries is that
miners spend billions building ports, rail lines and mines, unlike
banks, who don't need to spend billions building new banks.

The miners would pay more tax if they stopped developing new mines,
but that would hardly be in Australia's long term interest.

Poor Belly, belly-aching again.

I have no qualms about the mining tax, or the carbon tax but would comment that Swan and Gillard messed up both and have failed to capitalise on the initiative, which, if I am not mistaken, was forced upon the ALP by the Greens.

Gillard advised Rudd not to go there, remember?

Swan failed to take the Henry review and apply it, just as Howard failed to take, was it the Campbell review? and apply that, leaving it to Hawke and Keating to do the work of the conservatives, with Kelty and the ACTU.

Swan and Gillard have squandered their time, as Rudd did before them, although, of course, Swan Rudd, Tanner and Gillard were all complicit in Rudd's failures too.

I will bet the miners would jump a a system that makes them pay 30% tax on every dollar (gross) that they turn over.

The flip side would be thatbthe government foots the bills for exploration and, they fund the losses.

The mining execs are far smarter than the pollies, so my bet is they will find a way around this mining tax, simply because they can.

I used to say when Kerry Packer was at his peak, our chief accountant (the treasurer) was on about two hu dred grand a year, while his was on two million.

Who is do you think was the better of the two.

Because of the money on offer for pollies, we generally only get to choose from those the corporate world didn't want.

Yabby, you either misunderstood or chose to ignore parts of my post.

I support the tax breaks, to encourage R&D and to get the investment and projects off the ground, as you say.

However, I also support companies paying a fair share of tax when they are making huge profits, which some of these companies are certainly making.

It should also be pointed out that the MRRT is deductable in regards to company income tax. (So by paying the MRRT, the company reduces its other tax obligations).

David, figures for companies like BHP are fairly public and are
well known. At the time of the mining tax debate, it was shown that
around 42% of BHPs profits were going in various Govt taxes, royalties
etc.

Where is all this money going overseas? No more per share goes
overseas then stays here and if you own a BHP share, your 30$ will
pay you around a dollar return, hardly mind blowing. The rest is
largely invested by BHP in new mining ventures.

Now if you want more profits to be paid locally, the only option
for the company is to cut back on investments in new projects.

If you want more of mining companies profits to stay in Australia,
perhaps Australians should stop throwing tens of billions of $ down
the pokies and buy some BHP shares instead.

Once again, royalties are essentially the cost the companies pay for the stuff they are digging out of the ground. They are buying the raw product from the state governments. It is completely separate from taxes and should not be "added on" to what they claim as tax paid.

So your 42% number is irrelevent. It is not the tax they are paying, it is the tax they are paying plus the cost of the product they are selling before they have mined it.

With tax breaks, they pay very little tax compared to other industries. The larger mining companies have acknowledged this and never objected to the MRRT in principle. Investment has continued to increase unabated.

*With tax breaks, they pay very little tax compared to other industries.*

They are hardly tax breaks, simply deductions for expenditure on
new projects, which is part of mining. No other industry has to
invest such huge amounts to earn a living. If you had rather that
they stopped investing in new projects, to Australia's long term
detriment, then just say so.

DC you I assume you don't understand the tax system, which is not unusual, because it's complex.

Say a mine has one million dollars in net profit, after running costs have been deducted.

I assume you think they should be paying $300K in tax.

If this is your take on it, then this is where you are wrong.

Even in something as simple as Retail, you have your sales, less your cost of goods, which gives you your gross profit.

You then take out your running costs, this gives net profit. (the mimes one million)

Out of this net comes deductions, depreciation, interest, etc.

Once all these are deducted, you arrive at your taxable income, which i swhat you pay 30% of.

The mines are even more complex than that.

What many fail to appreciate is not so much the tax miners pay, but also the tax they generate, that simply wouldn't be generated if they did not mine and, as mining companies only deal with ligit companies, every cent they spend is accounted for and, every cent earned externally is taxed.

People also misrepresent the numbers miners employ, even you say they only employ 220,000.

So I ask you, what about the jobs they create in the support roles.

These Jobs quite simply would not exist if not for mining.

I live part time in a mining town in QLD, and the transformation I have seen in recent years is mind blowing.

Three pubs, full to the brim every night, whereas five years ago, they may have had two people all night.

Accommodation, you are lucky to get a single room on any given night.

Workshops flat out supporting mining.

90% of these jobs simply would not exist if not for mining.

And all these businesses and their workers pay tax.

So I would suggest that not only do they pay their fair share, but they create more than Their fair share.

It's a very brave government that is willing to place that at risk, especially in the likes of QLD where even with mining we are going backwards.

I understand what constitutes taxable income thanks very much.
However, deductions which don't apply to other industries reduce mining companies taxable income, therefore they are taxed less on their net profit than in other industries.

For the reasons you stated, i.e. that the mining industry creates so much for the economy in additional jobs and economic activity, I totally support these tax deductions, which I have stated 2 or 3 times already. My own employment relies on the continuing development of the mining and power generation industries, and to a sadly dwindling extent the manufacturing industry. All of my income is generated from these industries.

But, when these companies are making more than marginal profits, there needs to be a mechanism to bring them back in line to a fairer share of tax contribution.

Also, when you consider that manufacturing employs so many more, and if better supported could increase Australia's ability to value add to what is being produced by the mines, why aren't manufacturing companies given similar tax incentives?

*However, deductions which don't apply to other industries reduce mining companies taxable income, therefore they are taxed less on their net profit than in other industries.*

Well you haven't listed them, David, so I am sure which tax deductions
that you mean. The miners do a straight calculation. If the after
tax situation means that it makes more sense to develop mines
elsewhere, that is what will happen.

Manufacturing already receives huge handouts, just think of the
car industry, where we give them billions for nothing. Fact is that
we are just not very good at manufacturing, our costs are too high.

fuel subsidies
reduced tax payments for the gas industry’s production of condensate
tax write-offs for capital works
deductions for exploration and prospecting
accelerated depreciation write-offs

Like I said, I support all of these to encourage new investment, but you asked for a list.

David, if you read yesterday's AFR, on page 4 you will find an
article detailing the 8.5 billion$ in tariff assistance provided
to manufacturing, at a cost to both mining and agriculture.
So don't get me going about subsidies.

I know of know fuel subisidies for mining or agriculture.
Fact is, they don't drive their machines on public roads, so the
fuel tax to build roads and maintain them, does not apply.

If miners build ports, railways and all the rest, why should they
not be a tax deduction? If they explore for minerals, why should that
not be a tax deduction? None of these things would take place, if
they were not in the mining business.

If we want to save a few billion, best we shut down the car industry.

Yabby, I agree with your last post. If you read through my posts properly you will see I support the tax incentives for the mining industry. If you are going to engage in discussion, put some effort into listening to what others are saying.

David Corbett:

Your post on Tuesday, 5 June 2012 11:10:45 PM concluded:
“So, to put it bluntly, the mining sector is paying less than its fair share and therefore should pay more.”

Your post on Friday, 8 June 2012 12:19:21 AM reads:
“Yabby, I agree with your last post. If you read through my posts properly you will see I support the tax incentives for the mining industry. If you are going to engage in discussion, put some effort into listening to what others are saying.”

You need to make up your mind whether you think the mining industry is paying its fair share or not.

To answer this, I would suggest your steer clear of the Australia Institute reports – I can vaguely remember the “Mining the Truth” report when it came out and have now re-read the section on subsidies – some of the claims are simply untrue and the general language used is extremely biased. I can offer some examples if you want.

I would probably give GetUp a swerve too. I saw a clip of a guy trying to explain mining royalties the other day and it was clear that he had no idea (and what he said was actually wrong) – sadly, people listen to ignorance and lies.

This has been an exercise in futility. But I'll give it one more shot.

1. Mining companies pay less tax on their net profit because they have additional tax breaks which provide incentive to reinvest, develop, explore etc. This is good because of the economic activity it creates, particularly in many rural areas.

2. Many mining companies don't make massive profits, so I think they should not be taxed any more than they currently are we need to continue encouraging investment.

3. Some companies make huge profits, even as a percentage on their investment. Past a certain point, there needs to be a mechanism to bring the tax contribution of those companies back in line with other industries.

So there, I can be for the tax breaks and for a super profits tax. I'm not sure the MRRT is the ideal way to do this, but the question was how much is their fair share which i tried to answer

3. Some companies make huge profits, even as a percentage on their investment. Past a certain point, there needs to be a mechanism to bring the tax contribution of those companies back in line with other industries.

DC, What a load of rubbish!

Some businesses invest a couple of grand on a computer and make millions.

Face book is a prime example, cost a pittance to set up, in real terms, yet is worth billions.

Do you think they should be paying a super profits tax.

This is where the whole MRRT falls down, as the mechanism is already there to collect taxes from resources, it's called royalties.

It's just that the bulk of the population lives in non mining states and they don't like it.

In fact, take WA out of the equation, and the rest of the country is almost, if not already, in recession.

As for QLD, where I live, we have the second highest mining, to my knowledge, yet we are still going backwards.

This MRRT is simply a money grab.

BTW, these other states are already sharing in the spoils, as many from there enjoy FIFO roles within the industry.

You can give it as many shots as you like David, that does not
seem to change your confusion. You claimed that all these mining
profits were going to overseas investors.

Well clearly all those mining profits are being invested in new
mining projects and not going into investors pockets, as the figures
for our largest miner, BHP, clearly show.

You need to follow the money, rather then make wild and spectacular
claims.

If miners build ports, railways and all the rest, why should they
not be a tax deduction?
Yabby,
It's all those tax deductions which cause the unfairness in our present system. Yes, it has been the norm for god knows how long but that doesn't make it fair. Make a Dollar, pay tax on it, simple. This writing your expenditure off at everyone else's cost is a crappy deal. A wage earner needs transport to go to work every day but can't write anything off. If a big business wants to make big money then let them buy the required machinery, don't keep asking the rest of us to pay for it & then pay tax again on the goods. Big business makes enough money to pay equal tax. No write-offs. Manage, like we do.

Indi, I seriously hope for your sake that was a blonde moment for you, and that you don't seriously think that way.

Thank god the powers to be don't think like that, cause I doubt we woud have invented the wheel. Not so much because we didn't know how, but rather, because we couldn't afford to take the risk if it failed.

R&D is written off at 125%, which is needed to invest the capital that is often placed at risk.

The whole point of this thread is not so much about how much tax miners pa, but whether it is fair for our government to accuse them of no paying their fair share.

Remember, governments set the rules, the miners simply work within them.

Now if fo some reason the rules are wrong, fix the, but don't accuse them of cheating tax.

I for one think they pay their fair share and some, as you should also consider the tax their industry generates, externally if you want to be very open about it.

Put simply, there would be a lot less taxes collected if miners stopped mining.

You may also recall that miners were out of mind, out of sight before the resources boom. Nobody cared about the failed projects back then, which by the way was most, as something like 19 out of 20 failed.

All written off by the way.

So be careful what you wish for.

*No write-offs.*

Individual, that truly was a blonde moment. Let me see, if Coles
pays 80$ for groceries, 15$ for wages, rent etc, sells for 100$
and makes 5$ profit, you want them to pay tax on the full 100$,
no write offs. They would be bankrupt in a couple of days.

Back to the drawing board there, Individual.

Well, that is the kind of thinking that has gotten us this far. You want change to our tax system but you don't want to change the tax system. Of course it sounds outlandish to you because that's all you know. Explore alternatives, start crawling to the outer edge of your comfort zone square. get a sniff of what's out there. There is this outfit in India that made bank loans affordable for the very poor. Any australian Banker would have sceamed blonde moment because they don't know anything else. You say the big companies would not bother, wanna bet ? As long as people have the urge of making more than others they'll comply with whatever Government throws at them. If you want our economy to get out of the bottomless pit we're presently in free fall in then you really should try anything to put the brakes on. Don't just say it won't work just because you fear the unknown might actually work. Flat tax, National Service are the road to recovery. No amount of expert gobbledegook will ever match common sense. Ask anyone who's doing it tough. Don't complain about the big companies making huge profits when you keep insisting not to change the proven failed system.

*Don't complain about the big companies making huge profits*

Well I'm not complaining. I work out if its worthwhile to buy
shares in them, which anyone can do.

I'm all for innovative thinking, thinking outside the square,
but at the end of the day, the numbers have to add up.

If they don't, you don't have the foggiest about running a business.

I suggest you all get a nice strong chair somewhere, to sit on in times of trouble.

The way things are going in Europe, & China, you may need to sit down, & hang on to your hat, in the all to near future.

Iron ore prices are on their way down, China has a huge stock pile of our, & others, coal & their usage is dropping.

All too soon we may have the chance to find out how good the mining boom has been. Rather than excess profit taxes, we just may find mines mothballed, waiting for better times.

It is not that long back that a mate of mine was wondering how long he would have his job in mining. He was looking enviously at a mutual friend working in a mine that supplied a power house, rather than export coal.

Many mines were loosing money on every ton they shipped. Their math said that it was approaching the point when mothballing the show would be cheaper than holding on, waiting for a price increase. Don't be too surprised if we see mothballed mines all over the Bowen Basin, & plenty miners looking for work.

If they don't, you don't have the foggiest about running a business.
Stg,
Ok, let's see how well you'll manage when Hasbeen's being proven right. I'm not a businessman nor do I want to be one. But do suggest the the past & present systems are working in the face of what's been happening suggests that businesses haven't been managing at all, they merely went with the flow, a flow that's now getting close to the waterfall. Let's see how you manage whilst going down that waterfall. All I am advocating is that everyone pays the same rate of tax, investor or not, businessman or not. Unless of course you insist that our present system is beyond improvement. In that case I suggest you're the one who hasn't the foggiest. I walked around Cairns all week, a city that is supposed to be the centre of the North. Small businesses are having closing down sales en-masse. Yes, a really great system. As long as people don't pay a rate of tax on their final profits that that system is an absolute failure. Write-offs should be measured as income if we really want fairness.

Hasbeen, you are quite correct. The economic tea leaves are full
of uncertainty and prices for both coal and iron ore have been
dropping dramatically.

We also know from the GFC, as soon as prices drop, miners start
to close mines and put development projects on hold. It has already
started, so the land of milk, honey and free handouts might not
have it as easy as many hoped for.

Individual, its pointless debating the topic unless you learn how
to use a calculator.

Yabby,
You just don't want to concede that the present tax is severely flawed yet you're baulking when another idea is proposed. What the gripes is with a flat tax is the fact that those who so heavily depend on write-offs are such poor managers that they couldn't manage without those hand-outs.

Individual, the problem is not a flat tax. Rates can be moved in
various directions, with various outcomes. What you are arguing
for is a turnover tax, rather then a tax on profits.

Now it is a fact of life that there are various ways to construct
a business model. Some rely on huge capital investments and small
profit margins. Many ASX listed companies would earn no more than
5% of sales, as actual profit. Other companies, say companies
selling services, have completely differnt figures, invest little
and have a much larger % as actual profit. To suggest that tax
be paid on turnover rather then profit, simply shows your ignorance.
Write offs establish the difference between turnover and profit.
They are not the same.

Well something we do all agree on is the fact that the wheels on the mining industry are looking a tad loose.

So, is this no sufficient reason to back away from the MRRT?

Labor won't, or simply can't, as their planned return to surplus, in fact, their entire strategic economic plan is modeled around the tax.

Put simply, they are hopeless business managers, and that's scary as they run the biggest business in the county.

As for right offs, indi said workers can't write off their travel to and from work.

Well neither can businesses, unless of cause they have a home office.

Now the tricky bit here is that if one claims to run an office from home, therefore claiming travel from home to work and back, they face a possible capital gains bill when they sell their family home.

Also, if a business has one vehicle, say a mower man starting off, a portion of the expense is deemed 'personal use' and as such can't be written off.

So indi, it's not all just a little boys club as you may think.

As for miners, you don't see them at the markets selling coal by the bucket full, for cash.

Every ton they sell is ligit and they pay the tax as set by the law.

If I have said it once, I've said it a thousand times, f the laws wrong, change it, but don't accuse an industry of not paying their fair share.

BTW I don't think the law is wrong as I appreciate not only the tax the miners pay, but the external jobs they create and the taxes these jobs generate.

Life a we know it will end without mining. Then we will have something to whine about.

paid on turnover rather then profit,
Yabby,
We, the ordinary people on the street have to pay tax on turnover, no write-offs for us. Write-offs are profit because it doesn't get paid for by the recipient of the write-off. Turnover is simply a lousy excuse not to pay one's way. I know this is the way it works but that doesn't make it right. I think it's an appalling system. Only a flat tax rate will bring about equality.
Only a flat tax will distinguish the managers from those who just surf the system. With a flat tax we could rid ourselves of a hell of a lot of parasites & put more more money in the public kitty. If pensioners can manage then managers should also be able to manage. A lot of business managers wouldn't know the meaning of the word manage & it's only because of write-off's that they get through the day, not skill.

*We, the ordinary people on the street have to pay tax on turnover, no write-offs for us*

You don't have any business expense to write off, Individual. All
you have to do is turn up for work. You sell your labour.

A businessman still pays tax on his private expenses. Only business
expenses are deductable.

Now lets say I had to build an oil refinery to earn an income and
you just provided your labour. Why would it be fair that we paid
the same rate of tax on our turnover?

You really can't be this stupid. Sometimes I think that you just
want a bit of attention, so pretend that you are.

Indi, a wage earner goes to the tax man and get your tax done each year, lodge the return and hope for a refund, correct!

Well, within your return you have 'deductions', examples being union fees, work boots/cloths, any tools of trade you may require, even travel expenses in some cases if you have to use your own car to run an Erin.

These are all ligitiment deductions, and so they should be.

I know a guy who owns strip clubs. The dancers rent the chairs from him each day, that too is a tax deduction.

Your flat tax you keep referring to would be better described as a transaction tax, whereby every dollar that is banked gets taxed, but it's more like 1% or lower and is in part a turnover tax.

But to suggest that business pays tax, before paying any loans, rent consumables is just not on and would simply mean the only jobs left would be working for the government, good luck there.

There are times when ome must simply accept that they made a boo boo and withdraw the statement.

I am afraid for you, this is one of those moments.

fellers,
I know exactly where you're coming from & what you're getting at. I was hoping some of the not so greedy thinkers out would have had ideas about this whole tax shamble & put forward their ideas of an alternative tax. No bites.
Yabby,
All you have to do is turn up for work. It's like saying all you have to do is to provide an infrastructure for your employees.
What I'm saying is we all have expenses BEFORE we get to the job. You can write off your fuel, your social outings, your phone bill, your whatever. A wages bloke can't write anything off. You build an oil refinery because you know you're getting it for just about nothing after several years of write-offs. Add to that a mark-up of God only knows how many percent & you're rolling in dough. You're not putting up any money nor do you take many risks, your greedy shareholders provide all that in the hope of making big dough for putting up a few bucks which they write off also. Just about everything in business is written off so the argument of providing so much borders on fallacy.
What I'm saying there's is enormous scope of revamping our tax system, the only handicap is that businesses would make less profit. Unless you support big companies deliberately planning to go bankrupt. Unless you support people losing their money because Superannuation companies run off with the money. Unless you support the present system which is slowly chocking our economy. Is that the system you believe can't be improved.
Rehctub,
Ok then call it a transaction tax if you insist. Are you also saying the present system can't be improved ?

*You can write off your fuel, your social outings, your phone bill, your whatever *

Well no Individual, I can't. I have private expenses and business
expenses. I pay tax on private expenses. I buy a vehicle and
run a log book. I pay tax on private phone calls, pay tax on
part of the computer, as part of it is used for private, part for
business, pay tax on fuel used privately, pay tax on money used
for social outings. I pay GST on those things as well.

Some business people do rort the system, but today with data matching,
it's not hard for the tax dept to pick it up. So why should I risk
that? You would be amazed what the tax office knows about you and
everyone else in this country, all done electronically these days.

Indi, of cause the system can be improved, in fact, it must be improved, as the way we are heading, there will simply not be enough tax collected to fund everything. Shy else do you think this government wants the MRRT.

They tell us it's for the benefit of all, but their underlying motive (in my opinion) is to try to fill the void that is obviously headed our way. Even their budget estimates rely on it.

To elaborate on what Yabby said, the tax dept has programs that pick up anomalies within industries, If the figures presented fall outside these, they investigate further.

Another thing about company tax, is there is no tax free threshold, so tax is paid on every dollar of net income. Furthermore, unlike workers, you don't get your tax back if you don't work for a while.
, although is is talk about a change here, being able to write off bad years against good ones.

As for mining, there is nothing stopping anyone from going to some far away place, in the middle of nowhere and buying land, in the hope you will find minerals.

Miners did this many years ago, in fact, many went broke trying to do just that, as many found millions worth of minerals, but the cost to extract them was more than they were worth.

Now if you get your wish, for miners to fund their exploration and set up costs with after tax dollars, then the minerals will stay put and our economy will dry up.

minerals will stay put and our economy will dry up.
rehctub,
with all due respect doesn't this smell a bit of the old pro-growth mentality ? I'd have thought it'd be a good thing in the long run to slow the mining somewhat. Our businesses are way to caught up in the whirl of more growth, more profit. I'd think that, as we can't keep having growth, we'll need to look at supply & demand to stabilise our economy. The present system of over supply & slowing demand is one of the carets indicators yet that the present practices are doomed. People simple need to come to grips with the fact that we can't keep affording to spend on frivolities. The other that needs to be realised is that we'll hit a brick wall soon when the non-brick & mortar infrastructure will stop paying dividends because there's no actual substance. Way too much wealth was made from literally nothing in the digital revolution & this wealth is not shared.

For anyone still bothering with this thread, I have done a little ‘research’ into some of the claims. Took me a while, which is why I’m a week behind in posting. This will extend over several posts, so please bear with me.

Putting party political mantra aside (I am non-partisan and would prefer people to come up with alternative solutions rather than regurgitate policies of their preferred parties), income is income and tax is tax.

Income is not income less operating costs LESS depreciation, amortisation, bad debts, interest on loans and anything else you care to mention BEFORE declaring taxable income.

So, referring to the government (any) as the government of the day, or GOD, we are best served by analyzing Individual’s claim that tax is generally unfair, rather than denouncing it out-of-hand. What we all do seem to agree on is that taxation is the only reliable source of govt. revenue and is therefore required at all levels.

His claim that companies are able to write off too many expenses in lieu of paying tax is actually warranted, but that is not the fault of the companies, it is the fault of the system. The same argument extends to personal taxation, but that is for another time.

So, assuming tax is necessary for society to function, how do we fairly distribute the burden? The biggest mistake the GOD made was to paint a target on the back of the mining companies, under the guise of giving everyone a ‘share in our mineral wealth’. With Gina now on a path to revenge and the economic implications largely unknown (but much guessed at!), the outlook is uncertain.

Now, if the GOD had done a bit of lateral thinking on this one and had taken into account that a) mining booms are historically cyclical and reliance on taxation boosts from a single sector of the market is a dangerous thing, and b) many of the mining companies are actually already paying more tax than other industries (see below), it could have come up with a much FAIRER and better solution

(Then again, perhaps the GOD is simply taking advantage of the current market to fill the empty coffers and doesn’t really give a toss about what happens in 5 years time, at which point another GOD may well be in place anyway!) ;)

FACT: There are very few people and companies who pay their fair share of tax. Again, not their fault. If the system is able to be rorted, it will be. If you trawl through endless annual reports and check the figures, only a handful of the big players in Australian business actually pay 30% tax, a figure which is only nominal anyway and is enough of a fuzzy rounded feel-good amount to beguile just about everyone.

For example, according to 2011 annual reports:
CBA paid 27% on its reported profit before tax (PBT), or 13% of revenue.
NAB paid a mere 22% of PBT or 4% of revenue.
Xstrata paid 26.2% of PBT or 6% of revenue.
Wesfarmers paid 28.9% of PBT or 1.4% of revenue.
BHP paid 27.5% of PBT or 13% of revenue.
Telstra paid 28.6% of PBT or a woeful 5.1% of revenue.
AMP paid no tax, posting instead a $3M tax credit which was 0.6% of its PBT or 0.04% of revenue.
On the other hand, Woodside paid 31% of PBT or 14% of revenue.
And what of Rio Tinto? Well, it may surprise some to learn that they paid 48.7% of PBT or 26.5% of revenue. Of course, this figure would also include mining royalties, accounting for its higher than average amount.

So, how is it that some companies (like some individuals) pay more tax than others, and hardly anyone pays their ‘fair share’? In the case of companies and business, here is the irony: companies must work very hard to REDUCE their PBT, in order to minimize tax payable and increase net profit margins (PAT). Make sense? Not really. Individuals do the same thing, by writing off expenses, salary-sacrificing and claiming everything allowable, so as to creep down into a lower ‘income’ tax bracket and thus escape paying their ‘fair share’.

Individual called for a tax on revenue, but others were right in claiming that under the current system, this would cripple all businesses. Also, there are legitimate costs in running a business (operating costs) which need to be deducted prior to declaring income.

But what if we changed the system? More importantly, what if we simplified it? Gasp! Something no government (or accountant) wants to do because that would call for easier public scrutiny, but there is much to be said for the old adage: Keep It Simple, Stupid.

Instead of a supposed 30% tax on profits (which few pay) we imposed a much smaller percentage (20%) on revenue after operating costs, (call it RT) and then a further 11% on super profits ( profit over $2bn)? Call this one SPT. This shields the smaller companies, takes a ‘fair share’ across the board from all the players (large and small) and provides a totally transparent framework.

Naturally, some companies would pay more tax, some less, as it would depend on what constitutes ‘operating costs’ and the nature of the business. For the sake of this example, the definition of OCs remains the same as stated in 2011 annual reports. All other costs incurred by the company outside of these OCs are the companies liability and are not deductible prior to the RT being levied.

If we do this, the following applies to 2011 figures:

CBA paid $2.637bn on $9.488bn PBT leaving $6.394bn PAT
New System: $2.692bn tax, leaving $6.355bn PAT

NAB paid $1.51bn tax on $6.7bn PBT, leaving $5.22bn PAT
New system: $2.025bn tax, leaving $4.67bn PAT

BHP paid $6.48bn tax (plus $828m royalties) on $31.26bn PBT leaving $23.95bn PAT.
New system: $8.81bn tax (+ royalties), leaving $22.37bn PAT

Telstra paid $1.31bn tax on $4.56bn PBT, leaving $3.25bn PAT
New system: $2.09bn tax, leaving $2.47bn PAT

Xstrata paid $2.22bn tax on $8.44bn PBT, leaving $6.23bn PAT
New system: $3.39bn tax, leaving $5.96bn PAT

Wesfarmers paid $784m tax on $2.71bn PBT leaving $1.92bn PAT
New system: $1.65bn tax, leaving $1.34 PAT (not subject to SPT as profit after RT and expenses below $2bn)

Woodside paid $0.66bn tax with PAT of $1.51bn
New system: $0.63bn tax, leaving $1.59bn PAT (again, no SPT)

Rio Tinto paid $6.44bn tax on $13.2bn PBT, leaving $6.77 PAT
New system: $$5.54 tax (+ royalties), leaving $7.56 PAT. Obviously, after royalties are paid, the PAT is reduced.

Now, if you add all these figures together, under old and new systems/tax paid and PAT, we find that while the tax burden on individual companies moves up or down, collectively PAT lessens by $1.5bn ($53,794m to $52,320m) but the tax revenue INCREASES by $2bn ($24,305m to $26,330m).

This is just a handful of companies and there is no doubt that some would profit by this sort of tax system than others, but it has clear advantages over existing system:
1. Transparency. Both governments, public, business and investors know up-front what they are in for.
2. Demands better business governance. That is, businesses will look to keeping OCs down to increase profit, rather than raising them.
3. It will put an end to the practice of writing off and claiming costs which should be borne by the company as a legitimate risk rather than by the government/taxpayer (ie, depreciation, amortisation and finance costs).
4. It spreads the burden of corporate tax rather than targeting a single sector, and is therefore less likely to be subject to swings of a particular market.
5. It simplifies an overly complicated system and savings by government on administration and accounting procedures could add millions or even billions to the coffers.
6. Companies could save hundreds of thousands, if not millions, in accounting fees. Accountants still necessary, but not to the extent and cost they are under the current system.

Thoughts? Anyone?

Next stop: Personal tax!

Added to say that I was going a little cross-eyed this morning, so missed a few 'bn's after some of the figures. Please assume they are there and that no company need declare a PAT of just $1.74!!