Comments on: Rudd tries to do a Westfield

By: murray

murray — Wed, 16 Jun 2010 08:33:14 +0000

I don’t think that any debate or venturesome claim on higher moral ground will be enough to stop Rudd. It’d be interesting to see what would happen should he do so and then be unseated by the coalition. Is the coalition really going to hand back $5 billion – $10 billion to private interests if they’re presented with a fait accompli?

By: Mr G. H. Schorel-Hlavka

Mr G. H. Schorel-Hlavka — Wed, 09 Jun 2010 09:48:07 +0000

On 12 March 1891 Mr Abbott Delegate to the constitution convention made clear Crown land remains under the States; “that it is not intended that the Crown land of anyone of the colonies shall be interfered with by the federal parliament”. As such any taxation interfering with royalties would be unconstitutional. Also, taxation must be equal throughout the Commonwealth, meaning that the super tax must be applied not just to mining but all companies, including small businesses or none at all as then it is a general taxation and not one interfering with State royalties rights.
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As for Graham’s argument about the profit rent, this relates to a shopping centre regarding its tenants and would not be applicable if say I were to charge a profit rent on businesses not renting from me but from Frank Lowy business space.
Likewise, the Miners are doing their business with the State government and the Commonwealth then has no profit rent rights as such.

By: Graham

Graham — Wed, 09 Jun 2010 06:43:30 +0000

Yes Bryan, it’s a tax on profit. I used the wrong term. But it is not completely different at all. A tax on profit is slightly more punitive than a turnover tax, but behaves pretty similarly. You’d be safer with a turnover rent because profits are able to be manipulated whereas turnover can’t.

A hotel leased as a going concern is not the commercial equivalent of the RSPT. The operator, which is equivalent to the miner in this case, doESn’t put in any major capital, so their return is on their labour and some of the non-property inputs. The owners, which is equivalent to the government in this case, have built and developed the property and put most of the capital in.

Your hotel lease example is the equivalent of the government paying 100% of the cost of developing a mine, allowing the miner to operate it and then sharing the profit 50/50. That’s a deal that would probably be attractive to some miners, but it would be a very bad one for the taxpayer as governments have no demonstrated ability to find and develop mines.

By: Bryan Kavanagh

Bryan Kavanagh — Wed, 09 Jun 2010 06:14:50 +0000

Whrong, Graham, he RSPT is NOT a tax on turnover, it’s a tax on net profit AFTER all costs, so it’s completely different.

Why not use the correct commercial equivalent: A hotel leased as a going concern will split the net profit 50%:50% as rent and business profit. The RSPT is only 40%

By: Graham

Graham — Wed, 09 Jun 2010 05:23:00 +0000

It’s Rudd’s tax because while Ken Henry can propose (and he made 138 proposals) Rudd disposes, and he chose to dispose of all but a few of Ken’s recommendations. The ones he takes up are undoubtedly his by adoption.

Checked out your piece. Can’t see any case being made for mining being a special case.

By: David Collyer

David Collyer — Wed, 09 Jun 2010 01:35:59 +0000

I am most bemused that responsibility for the RSPT is sheeted home to Rudd. It’s Ken Henry’s idea, complete with beautiful economics. The ALP is incapable of such design.
Mining is a special case, economically. Check my blog post: http://www.prosper.org.au/2010/06/08/aussie-miners-no-one-likes-a-whiney-child/

By: Ronald Kitching

Ronald Kitching — Wed, 09 Jun 2010 00:57:36 +0000

An excellent observation Graham.

It is the duty of an entrepreneur to maximise his profits. Other entrepreneurs see what he is doing and compete with him. As you said, not necessarily in the same manner of delivering the goods.Thus in the long term, consumers get a better deal.

It may not happen overnight, but happen it must.

On the other hand robbery by violence or threat of violence, (which is what Rudd is peddling), in recent times past, and in some countries still, is punishable by the death sentence.

If Rudd was hanged, it would be a message to the bureaucracy and politicians not to be so rapacious.

Similar messages have been sent to the ruling class time and time again over the centuries.