The Reserve Bank has been trying to slow the economy by raising interest rates bit by bit. Well, Rudd has done in one swing of a SLEDGEHAMMER! I am impressed. The last sentence below will affect RCP.
Quote from Business Spectator Robert Gottliebsen http://www.businessspectator.com.au/bs.nsf/Article/BHP-RIO-TINO-capital-strike-resource-rent-tax-pd20100506-56SMK?OpenDocument&src=sph
Less than a decade ago resource projects were struggling. They will struggle again some time in the future. The Rudd plan assumes a ridiculous 6 per cent return and then lumps a 40 per cent extra tax on earnings above that, which takes the tax rate to the vicinity of 58 per cent and in some cases it can be higher. If a miner is well into the construction of a new project they will have to keep going, but if they have not started, the rewards now do not match the risk. Even if a resource company was prepared to take a punt it is unlikely that a banker would back it.
PS. you may have to join Business Spectator to read the full Commentary.
RCP Price at posting:
5.1¢ Sentiment: None Disclosure: Not Held
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