Comments on: RSPT RIP – Long Live the MRRT

By: Marco aka Cracticus

Marco aka Cracticus — Thu, 08 Jul 2010 04:51:45 +0000

@Spinnifex

Matie, I believe you ain’t seen nothing yet.

Have a look at the Osborne budget in Pommieland:

Budget key points: At-a-glance
http://news.bbc.co.uk/2/hi/politics/10374475.stm

Or the longer, fuller, version:
The Budget, June 2010
http://news.bbc.co.uk/2/hi/in_depth/business/2010/emergency_budget/default.stm

But, maybe things will be be different here… Right?

By: Spinnifex

Spinnifex — Tue, 06 Jul 2010 04:30:01 +0000

@Marco aka Cracticus
My son put it better. Australia is like a cheap whore without a pimp; she gets screwed and then the trick decides what to pay.

Yes, very, very worried.

By: Spinnifex

Spinnifex — Tue, 06 Jul 2010 04:30:01 +0000

@Marco aka Cracticus
My son put it better. Australia is like a cheap whore without a pimp; she gets screwed and then the trick decides what to pay.

Yes, very, very worried.

By: Marco aka Cracticus

Marco aka Cracticus — Mon, 05 Jul 2010 07:28:35 +0000

Spinnifex

I’m pissed off, too. And I’m worried as well.

By: Mega

Mega — Mon, 05 Jul 2010 01:25:30 +0000

The bigger picture about the RSPT and the MRRT is that the Australian industry groups (esp H Ridout et) were all pushing to get company tax down to King Henry’s reform of 25%. The Government promised company tax reduced from 30% to 28% so that it could get paid maternity leave and higher super through, without companies saying they couldnt afford it. so who pays? the taxpayer. and who pays for the MRRT windfall ? the end users. the taxpayer and the poor, in higher energy and other flow on costs. Why should Woollies, Coles, banks, etc all pay less company tax ? especially with a double dip recession looming and the central banks (BIS) now pushing for higher interests rates and an end to stimulus. Mega from http://megamoneybox.blogspot.com

By: Spinnifex

Spinnifex — Fri, 02 Jul 2010 17:13:03 +0000

Whichever way you calculate it, Australia just got screwed like a cheap whore.
Perhaps someone can explain why I should bother being a decent, tax-paying, law-abiding, voting, goods-consuming citizen? For the life of me I cannot see the point. I wonder if I am the only one reacting to this with a sense of total disengagement.

A pox on all their houses.

By: zebra

zebra — Fri, 02 Jul 2010 08:30:05 +0000

Marco,
I always thought the miners underestimated the original RSPT deduction and with some creative accounting could have made it work in their favour. But this seems to be a lesson in the harsh realities of politics rather than taxation. When I asked a friend of mine who has worked with Gillard from student politics days, through Brumby’s opposition and now in Govt, to sum her up in one sentence said “she is always the smartest person in the room”. To borrow one of Mule’s favourite expressions: “Time will tell”.

By: Marco aka Cracticus

Marco aka Cracticus — Fri, 02 Jul 2010 08:08:02 +0000

james aka zebra,

Okay, judging now by the modified text, we have:

“For an average miner [that is, not BHP] then Price(2010)/25 = Earnings x 14/25 = 56% Earnings so the actual MRRT is based on 19% of Earnings”.

To this one applies 30% to get 5.70% Earnings (and, it appears, someone will not be paying this tax, lucky big boy).

This is the formula MRRT = 30%*(75% – P/E/25)*Earnings

Compare this with your previous (RSPT – A Fair Valuation Based on True Value of New and Existing Mines):

“So under a scheme based on a fair deduction for existing mining assets the tax should be:

RSPT = 40% x Earnings x (1 – 5.5% x 14) = 9% x Earnings.”

So, we have 5,7% * Earnings, vs 9% Earnings.

Now, the Govt changed the reduction in corporate income tax to 1%, which brings in a little saving. Will this be enough to compensate for the 3.3% difference?

To me, it looks likely that there may be a revenue shortfall that will have to come from somewhere; after all, the Govt must have incomes to finance their spending…

Not to mention the other cost Mr. Rudd had to pay.

Had Mr. Rudd decided to negotiate, he’ll still had lost face (a political price); but he might have gotten a better deal.

Of course, that’s all academic now.

By: When will Julia go to the polls?

When will Julia go to the polls? — Fri, 02 Jul 2010 06:58:36 +0000

[...] taking Kevin Rudd’s scalp and now having done a deal with the miners, Australia’s new prime minister, Julia Gillard, is widely expected to call an early poll. The [...]

By: zebra

zebra — Fri, 02 Jul 2010 06:48:48 +0000

Jimbo – I’m sure you’ve noticed I’ve rewritten my post following your comment and some emails sent directly. Give or take a few % I think our analysis agrees. BHP-Billitons P/E is currently 19 so it looks like if the MRRT came in today they would pay zero. Of course it remains to be seen how the P/E for the shares of a global miner like them and Rio would be applied locally but I’m guessing it will go in the miners favour.