Friday, July 2, 2010

The RSPT is Dead Long Live the MRRT!

The Commonwealth Government * is announcing changes to the RSPT. The interest rate is 7% above the government long-term bond rate, the rate of the tax is 30% no refunds of losses and it only applies to iron ore and coal. It is being rebadged the "Minerals Resource Rent Tax". The existing Petroleum Resource Rent Tax will be extended to onshore coal seam gas production.

These are changes which the industry argued for. It will be hard for them to argue against this tax. A rough guess is that it will collect no more than the existing state royalties at the moment. Corporation tax will be cut to 29% (from 30%) in 2013-14. And the government is still proposing to raise compulsory superannuation contributions to 12% from 9%, a policy that only seems to have the support of the superannuation management industry. I think these are sensible moves (though why shouldn't gold mining say pay the tax?) though as someone who thinks we either should have a federal form of government for real or just go ahead and abolish the states I still don't like the idea of the federal government taxing resources which according to the Constitution belong to the states. And I don't have a problem with the nature of state royalties in the first place.

These are of course still just proposals. This tax is going to have to survive the federal election, the Senate, and possible court action on the constitutional issue.

* I know they call themselves the Australian Government, which I see as a sign of Ruddist centralization.

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