IMF Endorses Australian Windfall Profits Tax
I’m afraid I can’t find the report on the IMF website but this news story indicates IMF support for the new Australian tax on windfall mining profits.
The obvious thought, if it’s good there, why not here?
The Advertiser (Australia)
May 17, 2010 Monday
IMF backs super tax on nation’s big miners
BYLINE: BEN BUTLER
THE INTERNATIONAL Monetary Fund has backed the Rudd Government’s proposed Resources Super Profit Tax, saying that will help the government recover from the global financial crisis.
With company tax becoming a less reliable source of government income, resource rent taxes gave mineral-rich countries, such as Australia , “brighter” prospects of repairing crisis-battered budget balance sheets, the IMF says.
“Movement towards explicit rent taxation, could produce a marked revenue enhancement,” IMF staff economists said in a paper.
That came as fierce debate rages over the tax with the government yesterday mounting a media blitz to sell the levy while big miners BHP and Rio Tinto repeated warnings it could hurt investment. Both sides again said they were willing to negotiate. No major projects have been cancelled.
“Prospects are brighter in resource-rich economies,” the IMF paper said. “Though not immune to pressures of international tax competition, the element of location-specific rent in resource returns provides a potentially robust source of relatively non-distorting revenue. Over-taxation of rents subsequent to discovery risks deterring exploration, however.”
Treasurer Wayne Swan told ABC TV that miners “know in their heart of hearts that they are going to have to pay a bit more”.
The Australian Workers Union launched a TV commercial attacking industry bosses for getting rich through decades of “taking things out of Australia” and saying it was “time they put something back”.
In an email to staff, the head of Rio Tinto’s Australian operation David Peever said the tax “could erode Australia’s international competitiveness, curtail investment and limit jobs growth”. BHP chief Marius Kloppers said the RSPT was an “opportunistic” and “unfair” bid to fill a tax gap.