Digging through the mining industry’s lies – Crikey
Last Sunday the Rudd government announced its response to the Henry review into the Australian taxation system. Of over 138 recommendations, just four will be implemented. Is Kevin Rudd too timid to propose radical tax reform in an election year? Its centrepiece will be a 40 per cent tax on mining industry profits. The response to this proposed new tax has been mixed. On the one hand, it can be argued that since Australia's mineral wealth belongs to all Australians, and not just multinational mining companies, the revenue raised will be used to benefit millions of ordinary Australians. Then again, the mining industry earns Australia billions of dollars in export income, and employs thousands of people. According to some economists, China's appetite for our mineral wealth was one of the factors that kept Australia from going into recession during the global financial crisis. This may just be hyperbole, but to heavily tax such a viable industry will put it at risk. Massive projects are now believed to be on hold, and mining companies are threatening to move their operations elsewhere. The value of mining stocks has dropped, affecting shareholders and the retirements savings of superannuants.
Of course, the implementation of this tax depends on the reelection of the Rudd government, which is by no means guaranteed, nor is its passage by the Senate, and the Liberal opposition has already vowed to block it. Kevin Rudd often talks about making housing more affordable. To match his rhetoric with action, one thing he could have done was end the negative gearing of residential investment properties, which is one of the factors in Australia's current housing affordability crisis. Perhaps that's in the too hard basket for now. Indeed, we live in interesting times.
These are my initial reactions to this announcement. I'll leave expert analysis to the experts.