After months of relentless propaganda by mining companies and the corporate media, the idea of taxing the super profits of the big mining companies remains a popular measure. Recent Essential Research said 51% support such a tax (up from 50% since July 2010). Opposition to it rose from 28% to 33%.
Crikey.com鈥檚 Bernard Keane a September Essential poll showed 鈥渟trong support for the idea that the tax will keep mining profits in Australia instead of losing them offshore (57% agreement), for the idea of companies paying a 鈥渇air share鈥 of tax (62%) and that all Australians should benefit from resources that belong to all Australians (67%)鈥.
What people want is the government to have the courage to do a Robin Hood and take from the corporate rich to give to the poor.
We have seen the massive profits that the big mining companies and the big banks have made 鈥 even through the global financial crisis.
That the proportion of Australian mining profits paid in royalties and taxes by more than a third from 1999 to May 2010 just rubs salt in the wound.
We also know about widespread corporate tax evasion.
Adele Ferguson said in the November 21 Age: 鈥淚n Australia there are more than 1000 businesses with an annual turnover of more than $250 million 鈥 The problem for the [tax office] and the government is that tax collections have hardly budged in the past few years and, between 2005 and 2008, more than 40% of all company income tax returns lodged by big business taxpayers paid no tax. Of those, 20% made a profit.鈥
So should we celebrate the passing of the Gillard Labor government鈥檚 Minerals Resource Rent Tax (MRRT) and the extension of the Petroleum Resource Rent Tax (PRRT) through the House of Representatives on November 23?
Are these really 鈥渉istoric reforms to lock in the benefits of the mining boom and deliver a fair return from the development of the nation鈥檚 resource wealth鈥 as the government claims? Hardly.
First, the MRRT is a version of the original mining super profits tax proposed by the Rudd Labor government in 2010. It has been reduced from a 40% to a 30% tax on super profits (defined as profit over 6%) of some big iron and coalmining companies.
The effective tax rate is just 22.5% when special mining industry tax allowances are taken into account. The tax was to apply to companies that post a profit of more than $50 million. But at the insistence of independent MP Andrew Wilkie it will now apply in full only for companies that make $125 million profit a year.
But the biggest problem is that the proceeds from the MRRT are earmarked to go back to other 麻豆传媒 of the corporate rich. The bulk of the proceeds will fund a cut in the corporate tax rate from 30% to 29% and compensate business for higher payments into compulsory worker superannuation funds.
Rudd鈥檚 original version would have extracted more tax from mining companies but also cut the corporate tax rate to 28%.
The Gillard government made some other promises related to the new tax, including $200 million to fund research into the environmental impacts of coal seam gas developments. But these will likely be funded by future budget cuts elsewhere.
So it is not just a case of the government taxing some of the rich companies to give to other rich companies.
If the funds raised from the new tax take does not match predictions 鈥 very possible should demand or prices for minerals fall 鈥 the government will have to find more budget "savings" to pay for the promised corporate tax cut. This could also involve more cuts to public services and public sector jobs.
The Greens supported this dodgy bill on the promise that an identified $100 million gap between projected MRRT income and the promised redistribution to other business sectors would be covered by delaying a tax concession to the banks. But there is a possibility that other gaps could emerge.
Greens leader Senator Bob Brown has conceded there are problems with the MRRT but promised to try to amend the legislation when it goes before the Senate next year.
Brown on November 23: 鈥淭he Greens want a fairer mining tax and our focus, all the way down the line, has been on improving the mining tax. There is further work to be done when the bill reaches the Senate and, remember, government legislation covering the separate tax break for big companies is yet to be introduced to Parliament.