|
|
LVRG Blog — Thursday, October 21, 2010:
Replacing Mining Royalties and Company Tax
A submission by Prosper Australia* to
the
Inquiry into a National Mining
Tax
(Senate Select Committee on
Scrutiny of New Taxes)
Abstract
A new federal tax on economic rent accruing to corporations should not be imposed on top of existing taxes, but should lead to the abolition of State mining royalties and corporate income tax. To that end, the new tax should have the broadest possible base. In recognition of the States' ownership of minerals, the revenue raised by the new tax from mines in each State should be refunded to that State, subject to abolition of royalties, and with consequential adjustments to horizontal fiscal equalization. The applicability and mechanism of the new tax on corporate economic rent should not depend on the source of the rent or the size of the company. For the mechanism, the existing petroleum resource rent tax (PRRT) offers a worthy model, except that the rate would need to increase in order to pay for the elimination of corporate income tax.
Contents
- Normal profit vs. economic rent
- The folly of taxing normal profit
- Land rents vs. mineral resource rents
- Whether economic rent can be “taxed” at 100%
- Why credits for sub-normal profits should not be refundable
- Why royalties should not coexist with the RRT
- Why interest should not be deductible
- Why iron ore and coal should not be discriminated against
- Conclusion
Full text
See: Submissions received by the Committee (No. 1).__________
* Lodged 20 October 2010.
