The mining tax is market linked so with ore prices down recently the Gov't did not collect a great deal of tax.

Sloshing about in the mining states is considerable money collected from increased royalty levels that should have turned up as mining tax revenue (these increases after the states claimed the mining tax take would kill the golden mining goose.)

The money is already benefiting the economies of those states, so is it OK to reduce their GST allocation in accordance with the extra mining royaltes that created to mining tax shortfall? Is reducing GST allocation an abuse of state rights, or a fair response?

Some claim the minerals belong to all Australians, but I don't think that is so under the Constitution, so the states have a lot of power to fight the battle.

I believe that if royalties are made undeductible before tax the miners may stand on their haunches and simply refuse royalty rate increases, but not without an almighty fight against the federal gov't against such a change.

The Coalition wants to repeal the tax, going against the majority wish of most Australians, I believe, especially those from the non-mining states who are not benefiting from the current situation.

Labor must get its act together quickly and go to the election with a reviewed position on royalties, making it a major plank in its policy platform. The fight with miners will do them a polling favour to boot, IMO

I strongly hold the view we are better if Federal governments get tax.
States raising Royalty's is a mistake, in my view, and maybe is done to harm federal policy's.
We know WE QLD and SA benefit from the extra Royalty's, but a fairer distribution comes via Federal tax.
Gillard and Swan, past their use by dates, did not get it right on changing the first plan.
Some return to all Australians is needed from international hole diggers.
Long time to elections but it seems clear Tony Abbott is unable to hold his own on this issue, Gillard trounced him today.

Quote "The mining tax is market linked so with ore prices down recently the Gov't did not collect a great deal of tax."

WRONG the Government caved in to the rich mining lobby and gave them too many concessions so they could avoid paying much.

Just like the wealthy Australians and companies have avoided paying there fair share of taxes by using off shore accounts and tax havens.

They had to be forced to reveal how much they actually received by the Senate.

The program is costing hundreds of millions to collect by more high paid bureaucrats and public servants than it gets back.

The royalties that the mining states receive effectively trickle down through the Grants Commission, as the royalties are taken into account before the distribution. This leaves more in the "pot" for the non-mining states.
The big Gambling states, on the other hand, don't have there gambling taxes taken into account for the Commissions dispensation. Hardly equitable.

A paper by Ergas, Harrison and Pincus discussed both the RSPT and the MRRT and were critical of both - saying that "the successor to the RSPT – the Minerals Resource Rent Tax (MRRT) – has many of the inefficiencies of the RSPT but adds some further serious inefficiencies of it is own."

http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1006&context=smartpapers

It has also been suggested that Ken Henry assumed that a Federal Tax would be 100% efficient, but that it is in reality less effective than royalties.

"...the Minerals Resource Rent Tax (MRRT) – has many of the inefficiencies of the RSPT but adds some further serious inefficiencies of it is own."

Yes, one major inefficiency being that it lives alongside state royalties.

The miners have already said they'll fight any change to the MRRT to the death, and they have a fair case regarding deductibility of royalties from pre-tax income. That leaves the mining states vs the rest of Australia via the Grants Commission.

That the MRRT produces volatile revenues makes it hard to incorporate into federal budgeting, which can leave egg on treasurers' faces into the future. Better that any revenue goes into the future fund, IMO.

I don't get why the Coalition is OK with royalties rising but is against the MRRT. It's never cared for state's rights much, being past-masters in withholding federal funds to force its way upon states. Just what is it, the promise of financial support from miners? When Oz mining truly was booming, where was the great social dividend? Is that what to expect again under another Coalition gov't?

lee1 mentions casinos but they'll be doing business forever whereas minerals become depleted (unlike gamblers).

Rio Tinto is expected to report underlying earnings of more than $9 billion on Thursday.

BUT

Rio Tinto have built up $1.1 billion in tax credits due to the MRRT.

So Juliars caving in and giving too many concessions means they will pay nothing this year.