Keep WA Mining Strong Campaign

[Herne Hill Hammer]

Can the good people of the SRP board, if interested, please have a look at www.keepwaminingstrong.com and start picking it apart?

 

[Scotland]

Both sides of the argument need to separate royalties and profits. Every debate ends up with the mining lobby claiming they pay 30-40c+ in the dollar and the anti-mining lobby claiming they pay nothing.

Mining has been and remains poorly taxed. That is a reflection on how tax is collected, not how much.

Let's say iron ore is $100/t and you sell one tonne. It's a bulk material so you pay a 7.5% royalty. If it costs you $20 to produce you make a profit of $80.

$100 revenue
Costs are $20
State govt gets $7.50
Federal govt gets $24
Miner gets $51.50

$31.50 (royalty + corporate tax) as a percentage of $100 (revenue) is a total tax rate of 31.5%.
$31.50 (royalty + corporate tax) as a percentage of $80 (revenue - expenses) is a total tax rate of 39.4%.
But if you can consider royalties an operating expense then profit becomes $72.50 ($80 - $7.50) and corporate tax drops to $21.75.
Once you get deeper into detail and the vagaries of Australian tax law there are more and more conditions, loopholes etc. and the intention of the system in place gets lost/manipulated.

Iron ore is currently going for about $60/t. According to the website linked mining 'actually pays' $19/t. $19 out of a revenue of $60? I doubt it. According to the same website the Nationals think mining pays 25c/t. FFS.

I'm an advocate of (slightly) higher non-deductible royalties. You pay 10c in the dollar for every unit of saleable product, then you pay corporate tax on your profits the same as everyone else. But it's pointless discussing 'mining tax' when the tax system on the whole is such a joke.

 

[Herne Hill Hammer]

Both sides of the argument need to separate royalties and profits. Every debate ends up with the mining lobby claiming they pay 30-40c+ in the dollar and the anti-mining lobby claiming they pay nothing.

Mining has been and remains poorly taxed. That is a reflection on how tax is collected, not how much.

Let's say iron ore is $100/t and you sell one tonne. It's a bulk material so you pay a 7.5% royalty. If it costs you $20 to produce you make a profit of $80.

$100 revenue
Costs are $20
State govt gets $7.50
Federal govt gets $24
Miner gets $51.50

$31.50 (royalty + corporate tax) as a percentage of $100 (revenue) is a total tax rate of 31.5%.
$31.50 (royalty + corporate tax) as a percentage of $80 (revenue - expenses) is a total tax rate of 39.4%.
But if you can consider royalties an operating expense then profit becomes $72.50 ($80 - $7.50) and corporate tax drops to $21.75.
Once you get deeper into detail and the vagaries of Australian tax law there are more and more conditions, loopholes etc. and the intention of the system in place gets lost/manipulated.

Iron ore is currently going for about $60/t. According to the website linked mining 'actually pays' $19/t. $19 out of a revenue of $60? I doubt it. According to the same website the Nationals think mining pays 25c/t. FFS.

I'm an advocate of (slightly) higher non-deductible royalties. You pay 10c in the dollar for every unit of saleable product, then you pay corporate tax on your profits the same as everyone else. But it's pointless discussing 'mining tax' when the tax system on the whole is such a joke.

Thanks for that.

I was prompted to start the thread by an email we all received today at work.

The $19 claim, was just that, a claim. My colleagues and I discussed it and were very dubious of the figure considering there wasn't even a rudimentary break down of the figure to back it up.

It provide a link to the website which apart from the above also claims that 90% of all extra monies raised would be heading to the eastern stats, it then finishes with ratios of who in Western Australia benefits from mining in WA. It doesn't seem to specify that it's just from iron ore mining, which is what the proposed extra tax is aimed at, it just seems to lump all mining in together.

It sort of reminds me of a scene from the Richard Gere movie Internal Affairs. It's a long time since I've seen it, but I seem to remember a bloke (maybe Andy Garcia) walks into the bedroom and Gere's character is banging Garcia's characters wife doggy style. Gere continues and looks over with a smile and says, 'Trust me, I'm a cop'.