super tax myths and facts

Let me know if anyone has a view counter to this or debates any of the facts presented. Given the tsunami of rhetoric coming from all sides I thought it was time for a post on the facts.

MYTH:

The "super-profit" tax will tax miners a total of 40% on profits above the 10 year bond rate (5.7%)

FACT:

The marginal tax rate on all miners who make a super-profit is 57%

For example

if revenue = $100 and

Expenses = $50

Your profit = $50

You can then subtract depreciation, with the allowance - set at 6 per cent.

So if RSPT allowance = $3

You are left with $50 - $3 = $47

The $47 is taxed 40 per cent (the super tax).

So $47 x 0.4 = $18.8 and you are left with $ 28 .20

The $28.20 is taxed again at 28 per cent (the company tax).

So $21.20 x 0.28 = $7.90 and you are left with $20.30.

That adds up to about a total tax of about 57 per cent.

MYTH:

The mining tax will be used to fund superannuation increases

FACT:

Whilst the are plenty of government bureaucrats with super to pay, the total annual increment for them is only $250M and all other superannuation is paid by employers (including the mining industry). The cut in the company tax rate is designed to offset this, not the "super-tax"

MYTH:

"this tax is the same as the petroleum resource rent tax and that has caused no issues"

FACT:

It isn't - the PRRT applied only to NEW projects and kicks in only when profits are 5% ABOVE the long-term bond rate. Also the PRRT does not apply to projects that draw state royalties.

MYTH:

"the resources are owned by all Australians"

FACT:

onshore mineral resources are owned by the States, not the Commonwealth

MYTH:

"the super-profits levy was recommended in the Henry review"

FACT:

the Henry review never mentions the term "super-profits" and it recommended a corporate tax rate of 25% and the abolition of all state royalties to allow a resources rent tax. "Super-profits" was first mentioned by Marx is "Das Kapital"

MYTH:

"Miners only pay $1 in every $7 profit in taxes, as opposed to $1 in $3 ten years ago"

FACT:

Rudd conveniently left $80 billion dollars in corporate tax revenue off his figures. In fact, tax revenue from mining has grown 10 fold from $2.6 billion to $21.9 billion over the last 10 years. State royalties vary, but miners currently pay an average of $4 in taxes for every $10 profit they make.