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Tuesday, June 15, 2010

Wesfarmers joins RRT opposition

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Wesfarmers has joined the fight against the government's Resource Rent Tax. It is in the process of mailing a letter repudiating the tax on the basis that it will undermine the cashflows for which it made the investments, and that this would result in a significant fall in earnings. There is of course nothing wrong with the argument, though it could be more comprehensively argued. The good news is that Wesfarmers support broadens the number of shareholders who will be exposed to the views of mining companies; though I am not convinced their views are so well argued. See article in the SMH Online.

The reality is that Rudd was always taking on a very powerful industry, and he had not really thought out the implications of his tax. He made the mistake of listening uncritically to his bureaucrats. It seems that even Dr Gaunaut is distancing himself from the tax. See this lecture. I want to deal specifically with his arguments in my next post. Basically I will go through the whole paper and identify all the apparent contradictions.
Andrew Sheldon
Resource Rent Tax Australia
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