Resource taxes only work if you have a rare product that miners will operate no matter what the tax imposed. For commodities such as iron and coal Australia certainly has an advantage in that they already have high grade mines operating. As certain African countries found out, increase the tax and new investment slows when prices are good and then stops when prices fall. Companies become more interested in recovering their investment rather than investing more.
It also pays to high grade the mine in the lead up to the introduction of the tax. I bet a lot of mines that are in production or soon will be and have a 5-10 year mine life are currently looking at high grading their deposit and making what they can over the next 2 years at the expense of marginalising the remaining mine life.
As to those who say the resource belongs to everyone, therefore everyone should get a share. How much state and federal govt income comes from mining companies, mining royalties and income taxes of mine workers. People want to get a share of mining wealth, take one of those high paid jobs that currently go begging in remote parts of WA, NT and Qld.
Stopping the 2 speed economy argument is also flawed. Do they want the total economy to go slow? States that do not have a resources boom mainly as a result of their own policies. Victoria, Tas and NSW all have very restrictive policies that inhibit exploration and mining. Should they share equal income from the states that do have supportive policies in place?
Finally setting the rate as cutting in at the risk free rate shows an incredible ignorance of finance. It only works that way if your cost of capital is equal to the risk free rate. Does that mean the government will finance all mining operations?
M
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