We went about the mining tax the wrong way. Not because we let the mining companies write it. Not because we allowed accelerated depreciation during their construction phase effectively making the early revenue returns insignificant. Not because we attached expenditure to money we had not yet received. And not because we removed the tax just as they were moving into production phase which would have ramped up returns.
It was wrong to ask the mining companies for money. Despite the billions in profit they make each year, these companies invest a very large amount of money employing accountants to minimise their tax through various legal, if unethical, methods. We seem either unable or unwilling to close these loopholes and make companies pay the appropriate level of taxation on their profits so we need a new approach.
As we have discussed many times here, we are not constrained by money. Government spending and taxation are merely tools to control the amount of money in circulation, offering a stimulus or brake as needed to boost employment or dampen inflation. Talk of debt and deficit is largely irrelevant.
More importantly we need to ask what sort of society do we want? Do we have the physical resources to support that society?
East coast gas prices are expected to rise sharply from 2016-17, as Queensland gas exports link domestic prices to the international market. Demand from overseas is far greater than the domestic market and prices are much higher on the international market. Without a carbon price (and possible changes to the renewable energy target), if the gas price increases, coal-fired electricity will be more economic and our emissions will almost certainly rise.
In any mining venture we, the people of Australia, are the major shareholder. We own the resources and our government sets the conditions for approval to develop them. We need to remember that and use it to our advantage.
Rather than see our finite resources lost forever with the profits lining the pockets of foreign shareholders, we should be given a percentage of all production – not in money but in mined resources.
If we are given a proportion of the iron ore, coal, oil and gas mined here it would significantly reduce the cost to build things like the high speed rail or to provide power to hospitals and schools. Silica is used in many things from concrete to computer chips to solar panels and water filtration. If we kept some of the aluminium and all the other resources that are mined here we could save so much money building infrastructure and employing people in the process.
Forget taxation. Accountants can play their shenanigans with tax havens and profit shifting and company restructuring and accelerated depreciation all they like. If we kept, say, 10% of the production of any mine it would be far more valuable than numbers on any fiscal statement.
We have the power, let’s use it.
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