What’s wrong with a mining super tax?

June 07, 2010

Recent media reports are highlighting the effect that the scare campaign about the resources super tax is having on the wider community. It is hard to know exactly what the consequences of the tax will be at this stage, but some issues are clear.

First, it was not that long ago that the mining industry was asking for a tax that better reflected the up and down times of the industry.  At that time, there was a downturn. Currently, there is a mining boom.

Second, what we are talking about here is a tax on super profits. Mining magnates did not get to be some of the richest people in the country without making enormous profits from resources that, as has been pointed out throughout this debate, belong to all Australians. Why are we even questioning that there should be fair return from this industry to the Australian economy?

If the tax will only apply to “super profits”, it is hard to imagine that so many local industries will be affected as is being suggested, and of course that would not be a desirable outcome. But if those in the mining industry who are making the largest profits are prepared to ensure that the tax will not be passed on to the community and small businesses through higher prices to compensate, or a reduction in worker safety, this need not eventuate.

Third, mining has a huge impact on the environment and on human health, which is generally ignored because of our inability to reconcile planet health with our survival, and consequently the economy is always given first priority.  Take coal for example. We are still opening new coal mines, even when it involves the destruction of valuable farmland, and thanks to coal exports, Australians are per capita the worst greenhouse polluters in the developed world. Mining can also use huge amounts of water for which little is paid by the industry and which is subsidised by the tax-payer, and the pollution that results from mining can be far-reaching, long-lasting and, in the case of uranium, impossible to deal with in a satisfactory way.

Leaving aside the right or wrong of the Government using tax-payer dollars to fund an advertising campaign to explain or justify the tax, it is possible that on this occasion the Government has in principle come up with a good idea.

Let’s get some balance in this debate, and over time and after examining all the possible ramifications, we might just reach an outcome that could result in a fair return from an industry that has had it far too easy for far too long, and a much-needed injection of funds into some of the social and environmental initiatives that are required to bring about a healthy and more equitable society.

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