Tuesday, September 2, 2014

Australia does away with the mining tax

Australia's conservative government reached a deal with a fringe party lead by a mining magnate Clive Palmer to scrap the Minerals Resource Rent Tax [The Guardian]. The tax resulted from a failed attempt to tax 'super-profits', and resulted in little revenue [Sydney Morning Herald], however its proceeds where to pay for some social welfare programs. Some of the programs will not be scrapped but paid through tweaking Australia's pension scheme. Reports are generally positive to scrapping the tax because it was badly designed, mainly to the benefit of mining companies. The mining companies have gone recently through several tax and regulatory regimes, from taxes on profits to carbon emissions. That these taxes are now scrapped doesn't mean that they will not return in some form or another in the future [FT], maybe under a new government. The main opposition, Labour, is fiercely against this overhaul. I suppose the demand for stable laws raised in Argentina, also holds to some extend in Australia. Isn't there a middle way?

For some academic research on Tax reforms and natural resources at a global scale, see a previous post on a new IMF study.

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