Kevin Rudd, Wayne Swan and Julia Giddard
MORE than A$10bn of value has been wiped from the Australian share market since the government announced its intentions to impose a 40% tax rate on Australia’s key economic growth driver – the Resources Industry.
Widely known as the paramount reason the country finds itself in such remarkable shape following the GFC, the imposition of these reforms shows the remarkable audacity of Australia’s Labor government to attack the free market.
"It is highly regrettable that the Australian Government intends to single out one of the country's most important and competitive industries for punitive tax treatment, potentially damaging the entire nation's global competitiveness." - Xstrata chief executive Mick Davis.
The Australian mining industry accounts for ~50% of total goods and services exports and approximately AUD$80bn of the US$1.1bn economy. The imposition of the proposed tax of mining companies would make the Australian minerals sector the highest taxed in the world, eroding Australia's competitiveness, curtailing investment and limiting jobs growth.
Numerous criticisms have been voiced in opinion polls and blogs to those that are interested. With several pro-Labor views coming forward such as:
“The Labor government is merely trying to replenish the Budget deficit that was left by the Howard Era” Howards Problem Posted at 10:37 PM May 03, 2010 on Newsfeed.com.au
Any economically savvy Australian would realise this is not the case, and is actually Labor merely seeking new avenues for taxation to fund its reckless stimulus packages launched in the wake of the financial crisis. The losers are the equity investors of the resources industry, such as the Superannuation funds invested into the proud industry with family retirement funds.
"Stupid Dumb Labor, stuffs it up again, and the shares have now gone down as well. So everybody looses” No idea Labor Posted at 12:08 AM May 04, 2010 on SMH.com.au
But this point is even more misinformed, the winners here are the public and working class families, the unemployed and the immigrants who required Government aid to fund or help them enjoy more prosperous lives (which this writer does adamantly believe in).
However the underlying ‘Robin Hood’ principle, of stealing from the rich to give the poor, is not something that should be echoed in our government policies. Investors in the resources industry may withhold capital investment in the sectors if that cannot get adequate after tax returns, and furthermore delivers a hit to Australia’s free market policy that has invited capital investment for many decades.
Clive Palmer, soon to become Australia’s richest man had an interesting view that the policy was aimed at putting significantly more of profits being won from high commodity prices into the public coffers, was policy tried by “communists and socialists”.
Let’s hope a more rational government vetoes the 2010 elections before the ignorant Robin Hood Gang introduced the tax on the 1st July, 2010.
Widely known as the paramount reason the country finds itself in such remarkable shape following the GFC, the imposition of these reforms shows the remarkable audacity of Australia’s Labor government to attack the free market.
"It is highly regrettable that the Australian Government intends to single out one of the country's most important and competitive industries for punitive tax treatment, potentially damaging the entire nation's global competitiveness." - Xstrata chief executive Mick Davis.
The Australian mining industry accounts for ~50% of total goods and services exports and approximately AUD$80bn of the US$1.1bn economy. The imposition of the proposed tax of mining companies would make the Australian minerals sector the highest taxed in the world, eroding Australia's competitiveness, curtailing investment and limiting jobs growth.
Numerous criticisms have been voiced in opinion polls and blogs to those that are interested. With several pro-Labor views coming forward such as:
“The Labor government is merely trying to replenish the Budget deficit that was left by the Howard Era” Howards Problem Posted at 10:37 PM May 03, 2010 on Newsfeed.com.au
Any economically savvy Australian would realise this is not the case, and is actually Labor merely seeking new avenues for taxation to fund its reckless stimulus packages launched in the wake of the financial crisis. The losers are the equity investors of the resources industry, such as the Superannuation funds invested into the proud industry with family retirement funds.
"Stupid Dumb Labor, stuffs it up again, and the shares have now gone down as well. So everybody looses” No idea Labor Posted at 12:08 AM May 04, 2010 on SMH.com.au
But this point is even more misinformed, the winners here are the public and working class families, the unemployed and the immigrants who required Government aid to fund or help them enjoy more prosperous lives (which this writer does adamantly believe in).
However the underlying ‘Robin Hood’ principle, of stealing from the rich to give the poor, is not something that should be echoed in our government policies. Investors in the resources industry may withhold capital investment in the sectors if that cannot get adequate after tax returns, and furthermore delivers a hit to Australia’s free market policy that has invited capital investment for many decades.
Clive Palmer, soon to become Australia’s richest man had an interesting view that the policy was aimed at putting significantly more of profits being won from high commodity prices into the public coffers, was policy tried by “communists and socialists”.
Let’s hope a more rational government vetoes the 2010 elections before the ignorant Robin Hood Gang introduced the tax on the 1st July, 2010.
You're a staunce conservative. At the end of the day is A$10bn that much when you consider the market caps of both BHP and Rio? What does the AFR and the Sydney Morning Herald say about this Robin Hood tax? What has been the result for Kevin Rudd vs Tony Abbott's popularity? 7/10
ReplyDeleteThe more sophisticated media outlets have outlined that BHP and Rio (combined market cap ~USD$180bn - Comsec) have significant foreign ownership, 40% and 60% respectively - therefore the real impact will be high taxes on the profits that are heading offshore. But its important to also look at the smaller mining companies (~1000 listed on the ASX), which may find to difficult to raise capital and provoid adaquete risk-adjusted returns to their investors.
ReplyDeleteFurthermore, the current governments propensity to get involved in the corporate arena (i.e Telstra and NBN, Chinalco and Rio deal)is sending socialist (that world may be a little strong) messages to foreign investors by imposing draconian regulations.
Abbott's has sought to make the tax a paramount issue in the next election, seeking to veto its introduction. A conservative (like me), he sees it has nothing more than a tax grab at an opportunistic time.
http://www.abc.net.au/news/stories/2010/05/14/2899059.htm