Wednesday 9 November 2011

Unilateral Trade, Tax and Circus

"Fortescue, Labor Trade Blows on Mining Tax" is how the ABC's The World Today entitled its report on the hearing into the mining tax in Canberra, today. (See here)

As far as trades go, I'd say the "terms of trade" were quite "favourable" to the Labor MP: he gave little and received a lot. Something like a "unilateral trade": it reminded me of an inverse "shitty deal" US Senate hearing. (See here)

A little background information for overseas readers: after deposing former Labor PM Kevin Rudd last year due to the big mining corporations' opposition to the Resources Super Profit Tax (RSPT, for short), the Federal Government (headed by Labor PM Julia Gillard) is now trying to resurrect the RSPT (rebranded Mining Resource Rent Tax), with the same opposition from the miners and their conservative political minders in the Australian Liberal Party. (Don't ask: this is the antipodes and things here are upside down).

Anyway, beyond the niceties (or lack thereof) in the exchange, the most interesting part of the "dialogue" between Julian Tapp (believe it or not, head of Government Relations, Fortescue Metal Group Ltd) and Labor MP Andrew Leigh is this:
"JULIAN TAPP: We're also paying circa $450 to $500 million a year on current production levels in WA state royalties. So I do not agree that Fortescue does not contribute its fair share.
"ANDREW LEIGH: But in terms of corporate tax paid it wouldn't be correct to describe Mr Forrest as a tax payer, would it?
"JULIAN TAPP: Mr Forrest isn't a company. Fortescue Metals Group is the company.
"ANDREW LEIGH: But as things currently stand, it wouldn't be correct to describe it...
"JULIAN TAPP: We have not cut a corporate tax cheque today, no."
(Emphasis added)
In case the readers missed the detail, Stephen Dziedzic, ABC reporter, made it clear:
"Dr Leigh also pushed Fortescue to say how much tax it's paying at the moment. The company admits it has not yet paid company tax but says it will pay up to $800 million this financial year". (Emphasis added).
Or, according to Senator Chris Evans (Government Senate leader):
" 'They [Fortescue Metal Group, that is] have never paid a dollar in company tax to date and they want to resist having to pay the Mining Resource Rent Tax,' Senator Evans said." (Emphasis added. See here)
But if the situation were not absurd enough, the timing of its release is insuperable. Just today, former Liberal Federal Treasurer, Peter Costello, published an op-ed in the SMH, stating:
"Australia has a decisive advantage in mining. It is carrying the Australian economy, but the old taxes such as company tax and royalties are not enough. The government thinks we need new taxes as well." (See here)

So, there you have it: Peter Costello warning about taxes strangling mining corporations... that don't pay corporate taxes.

To close in an appropriate note:

Note: this march is named "Entrance of the Gladiators" and was composed by Julius FucĂ­k (between the C and the K there is an I!!!).

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