Numeracy Rules the RSPT!

Cheering developments today show the force of numbers in the debate over the Resource Super Profits Mining Tax:

As the Treasurer implored the mining industry to drop its “rhetoric and threats” and negotiate with the government, his weekend claim that miners pay effective tax rates of between 13 and 17 per cent was torpedoed by tax office figures produced by the opposition.

The ATO data said miners paid an effective rate of 27.8 per cent, which rose to 41.3 per cent with the inclusion of state royalties.

The opposition also sought to undermine the source of Mr Swan’s claims – a paper from the US National Bureau of Economic Research written partly by a graduate student at the North Carolina University whose international comparison lumped Australia and New Zealand together.

The Coalition attacked the research, by PhD student Kevin Markle and professor Douglas Shackelford, as “the shonkiest piece of work”.

Professor Shackelford said:

“[T]he paper is a draft form and likely will undergo additional revision before publication in a peer-reviewed journal. Moreover, the paper’s usefulness in formulating policy for one sector in one country should not be overstated.

In the updated version of the paper, the researchers removed references to mining companies paying an effective tax rate of just 13 to 17 per cent.

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0 thoughts on “Numeracy Rules the RSPT!

  1. Last night on ABC TV, Prof Marcia Langton, sometimes labelled as an Aboriginal activist, expressed dismay at the proposed supertax. Her theme was that miners already do a great deal to help her people and that they could do less if overtaxed. I take this as a sign that there is widespread opposition, not just the usual divisions into ideologies or political patterns.

    The bleating that “the minerals belong to the people, who are entitled to a fair share” is becoming tired. What of the farming harvest from the land, which takes away from it just as surely as taking minerals? What of the use of communal water, which belongs to all the people? The reality is that there is no minerals value-added to a piece of land hosting undiscovered ore. It takes people with capital, skill and courage to reveal this hidden wealth and they are entitled to a concept of ownership for their efforts. The general populace did not emplace the deposits – Nature did – and they did not discover them – the companies did.

    Time for a property rights approach.

    • Geoff, to take the other side, I think there might be an argument of a premium tax on finite resources due to ‘opportunity lost’ cost. But that is not the argument the Labor are using.

      • There is a definitional problem with “finite resources”. For a nominated material, like iron ore, there is commonly a continuum of deposits from very rich to very poor. The classifaction at a given time depends on the nature of competing resources. The early Pilbara discoveries turned the best working deposits then known to medium quality. Next, quality interacts with price as demand and scarcity enter the equation so the resource is seldom finite, just uneconomic.

        Elsewhere I questioned if people demanding to share in the mining of “our” minerals had a similar legitimate demand to share in the wealth owned by large property holders in the Sydney Central Business District. That is a finite resource, it had little value until developed and it also belongs to the people. So where is the difference?

        The important point is that those who create the wealth spend it to benefit the country. The present problem is that taxing the income leads to government expenditures that are often unwise, inefficient or just plain rorts. I’m sure that many people imagine that mining industry leaders have secret Swiss bank accounts with huge deposits of the “peoples’ money”. I don’t know of any.

  2. Last night on ABC TV, Prof Marcia Langton, sometimes labelled as an Aboriginal activist, expressed dismay at the proposed supertax. Her theme was that miners already do a great deal to help her people and that they could do less if overtaxed. I take this as a sign that there is widespread opposition, not just the usual divisions into ideologies or political patterns.The bleating that “the minerals belong to the people, who are entitled to a fair share” is becoming tired. What of the farming harvest from the land, which takes away from it just as surely as taking minerals? What of the use of communal water, which belongs to all the people? The reality is that there is no minerals value-added to a piece of land hosting undiscovered ore. It takes people with capital, skill and courage to reveal this hidden wealth and they are entitled to a concept of ownership for their efforts. The general populace did not emplace the deposits – Nature did – and they did not discover them – the companies did.Time for a property rights approach.

  3. Geoff, to take the other side, I think there might be an argument of a premium tax on finite resources due to 'opportunity lost' cost. But that is not the argument the Labor are using.

  4. There is a definitional problem with “finite resources”. For a nominated material, like iron ore, there is commonly a continuum of deposits from very rich to very poor. The classifaction at a given time depends on the nature of competing resources. The early Pilbara discoveries turned the best working deposits then known to medium quality. Next, quality interacts with price as demand and scarcity enter the equation so the resource is seldom finite, just uneconomic.Elsewhere I questioned if people demanding to share in the mining of “our” minerals had a similar legitimate demand to share in the wealth owned by large property holders in the Sydney Central Business District. That is a finite resource, it had little value until developed and it also belongs to the people. So where is the difference?The important point is that those who create the wealth spend it to benefit the country. The present problem is that taxing the income leads to government expenditures that are often unwise, inefficient or just plain rorts. I'm sure that many people imagine that mining industry leaders have secret Swiss bank accounts with huge deposits of the “peoples' money”. I don't know of any.

  5. Geoff, to take the other side, I think there might be an argument of a premium tax on finite resources due to 'opportunity lost' cost. But that is not the argument the Labor are using.

  6. There is a definitional problem with “finite resources”. For a nominated material, like iron ore, there is commonly a continuum of deposits from very rich to very poor. The classifaction at a given time depends on the nature of competing resources. The early Pilbara discoveries turned the best working deposits then known to medium quality. Next, quality interacts with price as demand and scarcity enter the equation so the resource is seldom finite, just uneconomic.Elsewhere I questioned if people demanding to share in the mining of “our” minerals had a similar legitimate demand to share in the wealth owned by large property holders in the Sydney Central Business District. That is a finite resource, it had little value until developed and it also belongs to the people. So where is the difference?The important point is that those who create the wealth spend it to benefit the country. The present problem is that taxing the income leads to government expenditures that are often unwise, inefficient or just plain rorts. I'm sure that many people imagine that mining industry leaders have secret Swiss bank accounts with huge deposits of the “peoples' money”. I don't know of any.

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