super tax myths and facts

Originally posted by Mozart56 ↑

An article about the billions the industry reaps in tax credits, and nobody's keen to talk about:

"Miners strangely silent on the billions they reap in tax credits

Resource giants shriek about what they pay. Here's what they get.

The mining industry, in its furious offensive against the proposed resource rent tax, is playing the old magician's trick of getting you to stare at their right hand, while ignoring what the left is doing. The tax they pay is their right hand, the benefits they receive in return is their left.

Don't be fooled. Any fair discussion of resources tax must include not only the tax side of the equation, but also the billions of dollars of benefits the industry receives each year, courtesy of the Australian taxpayer.

Let's begin with fuel. You and I pay 38 per litre in excise when we fill up at a petrol station. BHP Billiton and Rio Tinto also pay tax on their fuel, but the government gives nearly all of it back through the Fuel Tax Credits program. The mining industry is the largest beneficiary of this scheme (which is available to a range of businesses), receiving $1.7 billion per year in credits.

Next, consider the generous tax breaks available for mining investment. If I decide to start up a factory, I'm not allowed to claim the cost of equipment as a business expense in the first year - I have to depreciate the equipment over time, based on how long the equipment is expected to last. But if I'm a mining company, I can deduct the full cost of exploration immediately, or even 150 per cent of the cost of exploration in some cases.

A special tax amendment the petroleum lobby snuck through in 2002 to override explicit determinations by the Commissioner of Taxation gives further preferential treatment to oil and gas assets. So, a petroleum company gets to assume for tax purposes that an oil rig, for example, will only last for 20 years, even if in truth it is likely to be productive for much longer.

These tax breaks on exploration and equipment cost taxpayers more than $1 billion per year. The Henry review recommended we get rid of them.

Instead of adopting that sensible recommendation, the government is now proposing an additional $500 million per year in direct rebates to encourage exploration...."

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