Friday, July 30, 2010

Misconceptions about the resource rent tax

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Quote from Royd Bogan:
"The fairness thing eludes me. A tax is a tax, it's not an issue of morality. The rate of the tax is an economic and political matter, using "fairness" on either side simply distorts the discussion".
Oh, a pragmatist. Well you know we are close to fascism when the popular consensus is that 'morality is not an issue', that a 'tax is a tax'. Great logic. Bogan has descended to the cognitive level of a common house pet. Oh, hang on, he is talking economics. Hell, he has gone off the monitor..warning! Warning! Back to pragmatism. Well, you know economics actually acknowledges moral issues. i.e. It is based on the concept of 'rational man'. It assumes in fact that we are all rational. Which means...if you introduce some psychology, we like to be appreciated or validated for good, not punished for it with high taxes, or worse resented/hated. Hating millionaires might become popular next. Vulgar materialism anyone? It also means we like to avoid sovereign risks, so with little property rights in Australia, we might be better off investing in Ethiopia, where they have greater respect for wealth creation because they have none. The next thing is industry moves offshore, Australia is no longer a centre of mining industry, so we all live in South Africa or Brunei instead. Brain drain 20 years off. Is that enough economics for you; even tossed in some psychology and tourism for dessert.

Quoted from Adultmale
"I forgot to say that the mining companies already pay the same tax as all other companies (as well as royalties). You have to ask yourself why Kev and Julia aren't putting a 'super profits' tax on banks. They post obscene profits every year while they are actively reducing their work force and closing branches". Source: Political Forum.com
The reason is simply that the banks and media always support the government, and the govt always support them. The banks and media are bipartisan supporters of govt, and the feeling is mutual. Look at how the govt obstructed the IMF, which is suing the banks to get them to repay their unfair fees. How long did it take the govt to reduce interest rates on credit cards.
Apart from these vested interest groups, there are also partisan groups like the unions (Labor) and business (Liberals). The banks and media are the 'untouchables'. Google is also untouchable for strategic reasons....it only pays 0.5% tax on its Australian income. Lucky guys!

Quote from Royd Bogan:
"As for the economic benefit of mining, yes it's there but it's sad to have to acknowledge that we don't have the wherewithal to actually produce something from the minerals we dig up and export. That's the bloody annoying part, the cargo cult mentality of the Howard government has apparently been continued by Labor. If we actually used the stuff ourselves we'd have a stronger economy, but it's easier to dig it up and sell it to China then buy back the goods. Some things never change". Source: Political Forum.com.
More commentary by people who don't understand commerce or economics. The reason why we don't process iron ore is because we cannot compete with China. Now, if you think about it, the reason is that we have minimum wages in part (because of Socialist Labor), geopolitical and geographic issues, and also because we can get greater productivity from placing our labour elsewhere. i.e. IT sector.
The reason we don't use iron ore is because we consume very little. Few countries can compete with China on processing costs. That will be true for another 2 decades, then Vietnam and India will be cheapest, then probably Africa I guess. Iron ore needs deep water ports.
We used a great deal of coal....but I guess many of you are not too happy about that. I love the mentality though...love what you do for the country...but do you mind if we screw the industry and investors. Why would you want to invest in mines or downstream industry if you as an investor are treated this way. Have some empathy or proclaim your parasitic souls.

Quote from Royd Bogan
"The miners can stop work on a site if the price of metals beomes unprofitable. They sack the workforce, install a maintenance and security workforce at lesser cost and mothball everything until the price goes up". Source: Political Forum.com
You mean investors should take a loss (as opposed to making a profit) in order to support those parasites whom think the world owes them a living.
Let me understand this, you want the cash, but not to support stable jobs? Clearly you are advocating shutting mines. So I guess you are just a cynical leach, as opposed to an idealistic one.
Rest assured there will be millions of you trying to grab a buck from the miners. Rest assured exploration spending will evaporate in new projects. It will continue in developmental projects for 6-10 years, but that will be the end of the mining industry. Maybe the Chinese will not even fund developments, opting for safer West African countries like 'Angola' instead. Hard to believe we could 'out' Angola in the sovereign risk stakes, but clearly that is what the standards of parliamentary conduct have descended to....and I don't like the Liberals either. I suggest not voting or voting for a minority like the Liberal Democratic Party. They don't have much on policy or principles, but I think that's because they have no money. Mind you, when they do, they will probably become liberals. Ok, so I'm all you've got, and I'm not running or even voting...so there you go. Go buy a house or drown your repressed memories of this conversation.
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Author
Andrew Sheldon
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