Once again both the Government and the Opposition have not properly explained what on earth is this beast called the Mining Super Tax. We all understand the word Tax and most of us know something about the mining industry, but throw the word Super into the mix and it is no wonder that confusion reigns. The very word Super makes people’s eyes glaze over as it is such a complex issue, but this tax isn’t even about superannuation. So why confuse the message even further by using the word super? It is confusing enough without throwing in a furphy.
Ross Gittins, the Economics Editor of the Sydney Morning Herald, commented that even an economist is struggling to understand the complexities of the Super Mining Tax. So how are the rest of us supposed to understand it? How are politicians supposed to understand it and explain the Mining Super Tax to the rest of us? They appear to neither understand the complexities nor the unexpected consequences themselves. Rather than get bogged down in complex detail I will address my comments to the principal confusion or misinformation as it appears or rather as I understand it.
There is so much misinformation used by both sides as they talk about two entirely different sets of circumstances. The Government is saying that the tax amounts paid currently by miners average 13%. The Mining Industry says that currently 43% tax is paid by miners.
How could the numbers be so ridiculously far apart?
In my previous article The Federal Budget I said that the two side were talking about entirely different things, but both were right. It seems to be a repeat performance here. The Government in arriving at 13% tax paid by miners has divided the gross profit by the company tax amount paid. Actually Company tax is levied at 30% of net profit. On the other hand the Opposition is saying that the miners are paying 43% tax. To get to that number they are using Net Profit and dividing it by the tax payable at the company tax rate PLUS adding royalty payments.
As we know you can do anything at all with a calculator and make figures look respectable. No wonder the answers are like chalk and cheese. And as for unexpected consequences, the aces are wild. That is a further discussion by itself.
Gross Profit: Is calculated as sales minus all costs directly related to those sales. These costs can include manufacturing expenses, raw materials, labour, selling, marketing and other expenses.