The market is shooting first then asking questions, after lengthy reads over this tax it is only going to disadvantage big blue chip companies turning huge profits, if anything the small end of the market is getting a great deal and yet they are the ones getting punished at the moment.
this excerpt from ABC News - "the tax will only apply after exploration and capital investment costs have been recouped and shareholders have received a normal dividend. The Federal Government will reimburse mining companies the royalties they pay to state governments. The move is designed to force the states to drop their charges. The Government will use about one-third of the revenue raised from the resource super profits tax to establish a new infrastructure fund. The Government has indicated that resource-related infrastructure will be a priority for the fund, meaning resource-rich states like Western Australia and Queensland will benefit most from the fund. "It will ensure that all Australians get a better share of the boom," Treasurer Wayne Swan said. "There are billions of dollars that Australian people have missed out on. It is absolutely critical that we grow all sectors of the economy together." The Government says the new arrangements will see highly profitable mining projects pay more tax and less profitable companies pay less tax.
Sweeteners for resource companies
The Government is hoping it can relieve some of the pain inflicted by the new tax with other measures. There will be a five year phase-in period for the new tax and companies will be able to accelerate the depreciation of their existing projects. From July 1 next year, all mining companies will get a rebate for exploration costs at the company tax rate. Small resource companies not turning a profit will get the rebate as a cash benefit. "We believe the arrangement we are putting forward will encourage growth," Mr Swan said.
SDL Price at posting:
14.5¢ Sentiment: Buy Disclosure: Held
