Resource Super Profits Tax

The Western Australian Government does not support the Federal Government's proposal for a Resource Super Profits Tax.

The Western Australian Government does not support the Federal Government's proposal for a Resource Super Profits Tax.

Six reasons why:

1.     The term 'super profits'

  • The Federal Government defines super profits as a return above the long term bond rate currently at about six per cent

  • If six per cent is seen as a normal or reasonable rate then the whole industry should just buy treasury bonds - why invest, why take risk, why invest capital?

  • The Petroleum Resource Rent Tax has a threshold - long term bond rate plus five per cent

  • So the first deficiency is that super profits are defined at way too low a level

2.     The rate is way too high

  • At 40 per cent  of defined profits, this is almost half of the retained earnings

  • That limits the funds for further investment

3.     The application is too wide

  • It is not a special tax for exceptional profits

  • It applies right across the industry

  • That is more than 500 mining and petroleum projects in this State - every person working in this industry will feel the impacts of this tax

4.     Rebate of State royalties

  • Royalties are not a tax - it is a price companies pay to purchase the minerals off the people of WA

  • Under the proposal by the Federal Government - that money will be refunded

  • The mining companies will get the resource for free

  • We will be the only country in the world giving away our natural resources

  • Royalties should be treated as a tax deductible item like any other company expenditure

5.     Another layer of mining regulation

  • Perhaps an attempt to take over the mining industry

6.    It is also the case that new projects should have a period of time before the tax applies

  • This will help reduce the negative impact on decisions to invest.

"I ask the Federal Government to reconsider this whole proposal. This will damage mining in this State, it will make marginal projects close, it will stop investment and it will cost jobs," Mr Barnett said.

"If the Federal Government is determined to go ahead with the tax, then at a minimum they should change the structure of the tax along the above lines."

Premier's office - 9222 9475