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> 10 years ago

Shooting the breeze.

mineral1

4564 posts

mineral1

WA, 4564 posts

25 Jun 2010 12:27pm

Being a cynical pr1ck, I believe that the Australian public have just been ambushed when seeing on TV news screen this morning, that Major Super fund Managers mooted that the GST should be raised to 15%, from the current 10%

Now they (Fund Managers) wouldn’t be trying to protect their portfolios from the Mining super profit tax, and slamming the average punter across the board instead, would they

Carantoc

7283 posts

Carantoc

WA, 7283 posts

25 Jun 2010 3:52pm

I don't have much objection to GST or sales tax in principal. But it should be at a very low rate (perhaps zero) on items that are 'essential'. Such as (a very random list to illustrate my point) :

water, electricty, domestic gas
Childrens shoes
Milk
Fresh vegeatables
public transport

Maybe 15% on luxury items -
private motor cars over $50,000
fast food
'conspiracies monthly' magazine

doggie

15849 posts

doggie

WA, 15849 posts

25 Jun 2010 4:01pm

Carantoc said...

I don't have much objection to GST or sales tax in principal. But it should be at a very low rate (perhaps zero) on items that are 'essential'. Such as (a very random list to illustrate my point) :

water, electricty, domestic gas
Childrens shoes
Milk
Fresh vegeatables
public transport

Maybe 15% on luxury items -
private motor cars over $50,000
fast food
'conspiracies monthly' magazine

I thought that unpepared produce didnt get taxed?

'conspiracies monthly' magazine 25% on that one I recon

getfunky

4485 posts

getfunky

WA, 4485 posts

25 Jun 2010 5:11pm

To those folks that carped on against a potential mining super profits tax, don't let me hear one kn word when our personal tax (directly or indirectly such as a GST hike) goes through the roof in the next few years.

Bills have to be paid one way or another.

Kn idiots.

grumplestiltskin

2331 posts

grumplestiltskin

WA, 2331 posts

25 Jun 2010 5:41pm

personally, I would be happy to pay 15, probably even 18% GST if they dropped income tax altogether.
and a whole heap of other hidden taxes.

That way, we would actually get all the money we actually earn and its then up to us what we buy, but meh what would I know.

Mark _australia

23684 posts

Mark _australia

WA, 23684 posts

25 Jun 2010 8:46pm

I am more than happy to pay a bit more
Proviso is that the Govt:

(1)stops producing glossy brouchures
(2) drives their own cars
(3)stops fact finding missions when the "facts" they seek are available online and the people they need to meet can be teleconferenced
(4) stops giving $2million a year to an arts festival that runs for a week and largely comprises of long haired freaks doing stuff like riding a unicycle down the shopping mall or posing covered in paint. Due to its irrelevance to the majority of us, about 0.1% of people actually go to see it
(5) don't change the names of any more public utilities for no reason. Costs tens of millions of dollars and achieves nothing

feel free to add I'm too p!ssed off at them to type any more

theDoctor

NSW

5786 posts

theDoctor

NSW, 5786 posts

25 Jun 2010 11:26pm

Carantoc said...

'conspiracies monthly' magazine

Phew... UNCENSORED comes out quaterly...

what about the conspiracy 'dailies' e.g, the west australian, daily telegraph, sydney morning herald... talk about dross

getfunky

4485 posts

getfunky

WA, 4485 posts

26 Jun 2010 8:07am

theDoctor said...

Carantoc said...

'conspiracies monthly' magazine

Phew... UNCENSORED comes out quaterly...

what about the conspiracy 'dailies' e.g, the west australian, daily telegraph, sydney morning herald... talk about dross

Agree about the mainstream conpiracy rags Doc.

The West's primary use is as emergency dunny paper.

The one good thing about it is they are aware that life exists outside Sydney.. and Melbourne. (Quite a shock for most Sydney n Melb ~~journos~~ hacks).

choco

4186 posts

choco

SA, 4186 posts

26 Jun 2010 9:47am

grumplestiltskin said...

personally, I would be happy to pay 15, probably even 18% GST if they dropped income tax altogether.
and a whole heap of other hidden taxes.

That way, we would actually get all the money we actually earn and its then up to us what we buy, but meh what would I know.

that would work but it would be more like 25% GST

Gizmo

2865 posts

Gizmo

SA, 2865 posts

26 Jun 2010 11:06am

choco said...

that would work but it would be more like 25% GST

25% would be fine with me ....BUT MUST get rid of EVERY OTHER TAX and levy and the bureaucrats that administer the tax system. The tax system is an industry in itself

pweedas

4642 posts

pweedas

WA, 4642 posts

26 Jun 2010 11:22am

That would mean in effect, that the lowest paid people in the community would be paying the same tax rate as the highest paid people. 25%.

i.e. a single parent on $25,000 would be paying the same rate as Twiggy F. on $millions a year;
and a pensioner on $10,000 a year paying the same rate as the premier on $400,000 a year.
Somehow I don't think that sounds either fair or reasonable.

Gizmo

2865 posts

Gizmo

SA, 2865 posts

26 Jun 2010 2:24pm

pweedas said...

That would mean in effect, that the lowest paid people in the community would be paying the same tax rate as the highest paid people. 25%.

i.e. a single parent on $25,000 would be paying the same rate as Twiggy F. on $millions a year;
and a pensioner on $10,000 a year paying the same rate as the premier on $400,000 a year.
Somehow I don't think that sounds either fair or reasonable.

Not at all... a single parent on $25000 would pay 25% on what they spend and lets say they spend it all they would pay a total of $6250 tax.....
The present system as a tax free threshold of $13000 and then tax of 30% after that [for a bit]

So $25,000 - $13,000 = $12,000 to be taxed @ 30% = $3600 tax.
$13000 [tax free] + $8400 [after tax] = $21400 [total spend income] then minus 10% GST if all is spent.
$2140GST + $3600 personal tax = $5740 total tax paid ...+ fuel tax, water tax, land tax, bank taxes, etc,etc,etc....

and Twiggy F earns say 100 million and spends it all ... with 25% GST pays $25 million tax

So whats the problem? the more you spend the more tax you pay... and the more you save the less tax you pay.
The concept actually inspires people to work more, earn more, improve their life and eventually pay a fair share to the tax system.
I actually think that's VERY fair and reasonable.

pweedas

4642 posts

pweedas

WA, 4642 posts

26 Jun 2010 1:48pm

Here's the present tax rates so you can do a more accurate assessment. It doesn't come out quite as fair as you suggest.
The idea might sound nice but it fall down at the lower income end.
Maybe they could look at making some alterations for pays below say $40,00 pa and then it might be workable.

Personal Tax Rates (including 1.5% Medicare Levy)

2009/2010
$0- $6000 ---0%

$6001- $35,000 ---16.5%

$35,001 - $80,000 ---31.5%

$80,001- $180,000 ---39.5%

$180,001 & Above ---46.5%

2010/2011

$0- $6000 -- 0%

$6001- $37,000 --16.5%

$37,001 - $80,000 -- 31.5%

$80,001- $180,000 --38.5%

$180,001 & Above --- 46.5%

Sailhack

VIC

5000 posts

Sailhack

VIC, 5000 posts

26 Jun 2010 4:12pm

I might be uninformed (and most of the time, I am!

), but I read a few years back (prob around 2000-2002, after GST was introduced), that if EVERYTHING you purchase was taxed between 3 - 5% that no other taxes would be necessary...no tax returns but also no big corps dodging taxes.

Not sure how this floats, but from memory I read that it would bring in more money for the government also...anyone with accounting knowledge keen to comment?

Globetrotter

74 posts

Globetrotter

74 posts

26 Jun 2010 3:02pm

Gizmo said...

choco said...

that would work but it would be more like 25% GST

25% would be fine with me ....BUT MUST get rid of EVERY OTHER TAX and levy and the bureaucrats that administer the tax system. The tax system is an industry in itself

This would mean less work for my accountant & bookeeper

That would save me big$$$$

.... to remain compliant in the present system cost way too much, making it simpler & more transparent would be great.....This would also help tax the cash economy as the money will re enter mainstream economy at some stage(i think).... anyhow I have noticed less cash being offered since the gst was introduced.

Pugwash

7733 posts

Pugwash

WA, 7733 posts

26 Jun 2010 3:26pm

An oldie, but a goodie

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. ‘Since you are all such good customers, he said, ‘I’m going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’ They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

‘I only got a dollar out of the $20,’declared the sixth man. He pointed to the tenth man,’ but he got $10!’

‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved a dollar, too. It’s unfair that he got ten times more than I!’

‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two? The wealthy get all the breaks!’

‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

pweedas

4642 posts

pweedas

WA, 4642 posts

26 Jun 2010 3:57pm

Keep that in mind every time Kev or his replacement decide to beat up the mining companies.
There is no doubt that they are the only industry in Australia that provided the conditions that we got used to over the last 10 years.
To continue the analogy, if they stop paying for the drinks you will either have to stop drinking or pay for them yourself.
And under the proposed new '40% plus' tax there is no doubt they will do just that.
That's 40% on top of existing taxes, not a flat rate of 40% total.

maxm

NSW

864 posts

maxm

NSW, 864 posts

26 Jun 2010 6:23pm

pweedas said...

And under the proposed new '40% plus' tax there is no doubt they will do just that.
That's 40% on top of existing taxes, not a flat rate of 40% total.

When were the details announced? As far as I recall, Kev said absolutely positively it was going to be 40% but he never explained what it was going to be 40% of. And now it's probably not even 40% any more.

Pugwash

7733 posts

Pugwash

WA, 7733 posts

26 Jun 2010 4:50pm

maxm said...

pweedas said...

And under the proposed new '40% plus' tax there is no doubt they will do just that.
That's 40% on top of existing taxes, not a flat rate of 40% total.

Read this: ~~http://www.futuretax.gov.au/documents/attachments/Announcement_document.pdf~~

3.2 Extraction of resources 'releases' resource profits
Resource super profits = Receipts - Expenditure = Realised value of deposits

4.2 The Resource Super Profits Tax rate
The RSPT will be charged at a rate of 40 per cent of assessable resource profits (assessable revenue less deductible expenses including an allowance for capital expenditure).

5.3: Taxing point
Consultation with industry will explore the feasibility of a flexible approach to setting the taxing point.

5.4 Assessable receipts and deductible expenditure
The RSPT will allow deductions for the cost of extracting resources and getting them to the taxing point. The RSPT will not allow deductions for the following types of expenditure:
- payments of interest and financing costs, including the cost of issuing shares, the repayment of equity, the payment of dividends, and financial hedging costs;
- payments to acquire an interest in an existing exploration permit, retention lease, development licence, production licence, pipeline licence or access authority;
- payments to acquire interests in projects subject to the RSPT; and
- payments of income tax or GST.

5.6: Interaction with income tax
RSPT payments will be deductible for income tax purposes. This is consistent with the current income tax arrangements for state royalties, crude oil excise, resource rent royalty and PRRT.

Conversely, RSPT refunds will be assessable for income tax purposes.

Resource entities will continue to be subject to income tax on their exploration and production activities.

maxm

NSW

864 posts

maxm

NSW, 864 posts

26 Jun 2010 7:42pm

Thanks pugwash.

Hey! It says it's deductible from income tax. So it's 40% but other taxes are reduced because it is deductable, no? And they get a refund of the state royalties. So it's not 40% "on top of" other taxes.

Not to mention that that's probably all changed now.

Pugwash

7733 posts

Pugwash

WA, 7733 posts

26 Jun 2010 7:48pm

maxm said...

Hey! It says it's deductible from income tax. So it's 40% but other taxes are reduced because it is deductable, no? And they get a refund of the state royalties. So it's not 40% "on top of" other taxes.

It's 40% of everything above first 6% of RSPT assessable income (revenue). The RSPT payments are then deductible for calculation of income tax (companies tax).

It IS on top of other taxes! The claims from mining companies that they may pay 56.8% tax is correct. The government conceded this point also... Stating that it will only happen when companies make "infinite profits". We do not know what infinite profit means.

State royalties - this is also complicated!

5.5 State and territory royalties
The Australian Government will provide a refundable credit to resource entities for state royalties paid to State governments following commencement of the RSPT. The objective of the credit is to reduce the impact of state royalties and negate concerns that the resource profits tax is a ‘double’ tax.

The Government will discuss with the States on what royalty rates to credit, given that some royalty rates are in nominal dollars and need to be increased from time to time, while others are applied on a mine by mine basis. The refundable credit will be available at least up to the amount of royalties imposed at the time of announcement, including scheduled increases and appropriate indexation factors.

The state royalty credit may only be for the royalty rate at time of tax announcement.

There is one thing that I do not understand here... Will the royalty credit be treated as an RSPT refund??? If so, it will be subjected to income tax (currently 30%, said to be revised to 28%). See 5.6: Interaction with income tax.

pweedas

4642 posts

pweedas

WA, 4642 posts

26 Jun 2010 11:44pm

maxm said...

pweedas said...

And under the proposed new '40% plus' tax there is no doubt they will do just that.
That's 40% on top of existing taxes, not a flat rate of 40% total.

It's hard find one document to detail the percentage breakdown of one dollar of initial company profit.
The document which pugwash has referred to explains the basis on which the super profit tax is calculated, but then it conveniently glosses over the remaining taxes which are NOT deductions from calculation of the super profit tax.
One of the non deductible expenses is mentioned in just one small line; ".paymnents of income tax or GST."
Oh dear! Just one small line in all that blurb. You would have thought that they could have spelled out the impact of that wouldn't you?
Well not if they were trying to sell the idea.
From what I can see, here's how it works.
The super profits tax is the first bight of the so called "super profit", which at this point is deemed to be anything over a 6% return on total capital expenditure.
This tax is 40%, which leaves 60% of the profit to be dealt with in the normal way; distribute to shareholders, pay off capital borrowings, pay various fees and licences, and PAY INCOME TAX at the usual 30% company tax rate.
So of the 60% left after the super profit tax, the government gets another 30% of the leftovers; i.e. 60 X 30% = 18% more.
That makes the total tax 40% super profit tax plus another 18% for a total of 58%.
That would be the maximum if there were no deductible expenses, which is why Kev said it would only apply if they made "infinite" profit.
In reality, the actual rate would be somewhere between the 40% and the 58% rate.
The more efficiently a company was run then the closer it would be to the 58%.

Having said that, I do think that the more profitable mining companies can and should pay a bit more tax, but the proposed tax in it's present form is serious overkill.

Pugwash

7733 posts

Pugwash

WA, 7733 posts

27 Jun 2010 12:39am

pweedas - right on

nebbian

6277 posts

nebbian

WA, 6277 posts

27 Jun 2010 1:22am

I pity all the software developers who have hardcoded something like this in many, many places...

$TotalWithTax = $Total * 1.1;

Y2k all over again!

mineral1

4564 posts

mineral1

WA, 4564 posts

27 Jun 2010 10:43am

pweedas said...

maxm said...

pweedas said...

And under the proposed new '40% plus' tax there is no doubt they will do just that.
That's 40% on top of existing taxes, not a flat rate of 40% total.

pweedas, no the super profit tax wont get a run. You and the rest of us have been hood winked once again

The tax was never going to be as it was mooted.
But YOU WILL PAY MORE GST!!! Sure as the sun comes up tomorrow.
The whole thing (SPT) was a gamble by power brokers, to test sentiment in the voting public. They misjudge the reaction of the powerful mining lobby group. You being the mining group (for sake of the argument) would you spend $100 million to smash a tax that was going to cost you a possible billion dollars,? of course you would, and why not. This would be classified as a gilt edged investment.

And to boot, the adds are tax deductible anyway.
So the end result is Joe and Jane average will pick up the extra tax requirement in an increase in GST on top of the huge burden of today's society living cost(just ask the UK punters who now get hit at 20%

)

Pugwash

7733 posts

Pugwash

WA, 7733 posts

27 Jun 2010 11:09am

I think the government misjudged our nations intelligence. We can tell the difference between revenue and profit. We can tell the difference between rhetoric and fact.

Companies will fight it, it is a lot more than a billion. For some companies with iron ore and coal, it may cost more than a billion dollars a year. The government estimated it would earn $3 billion under the new tax in 2012/13 and $9 billion in 2013/14 (money that was all spent in the budget).

I will be very disappointed with Labor if they scrap the tax. It is on the table, so here's their chance. Change the model. Make it a REAL profits tax. Think about the interaction with companies tax. The mining industry has agreed it can pay more tax. The mining industry suggested moving to a profits based tax system. So lets do it, sensibly.

BTW, the JG interview with Laurie Oakes was interesting this morning. JG was the mind behind the governments immigration by water (how's that for spin

) and ETS position. JG spent most of the time wiggling, wording and ultimately said nothing. Just like Elmer Fudd.

Poida

1922 posts

Poida

WA, 1922 posts

27 Jun 2010 2:11pm

In England they hit up the banks for extra tax, coz they caused the gfc and then they bumped the vat from17.5% to 20%. So I can see the govt backing off the miners a touch so they will accept some additional tax. Then the govt will hit up the banks and the gst for the extra.

elmo

8894 posts

elmo

WA, 8894 posts

27 Jun 2010 2:13pm

This one has me a wee bit bamboozled

Ok so there was something on television (known for it's hard hitting news articles),

Search as I may, I can't seem to find any other news articles on this.

Can someone please point me in the right direction

pweedas

4642 posts

pweedas

WA, 4642 posts

27 Jun 2010 4:28pm

The reason it is so hard to find any authorative government publications on the overall workings of this is simple.
There aren't any.
Why would they want to put that up for scrutiny?

You can come to that conclusion by scanning through the only government publication on the matter, 40 pages of smooth talk and spin in the link which Pugwash put up;
~~http://www.futuretax.gov.au/documents/attachments/Announcement_document.pdf~~

FORTY pages of sales pitch with almost zero information of how much the total tax take would be and how that figure would be calculated.
That's not an oversight.
Note how often the inference is made that the total tax take would only be 40%.
Note how often they use the expression that Australians "deserve a fair return" for their resources.
You can't argue with that can you? And I don't either.
However, I do argue with their definition of "fair".
The proposed tax is much more than fair and it is that which would scuttle the industry if the tax was brought in, in it's proposed form.
It won't wipe it out completely, but it will put a severe dent in it.

There are various articles on the internet about this but nothing from any government authority.

You can look at this link for a reasonable assessment of how the figures pan out.
www.smh.com.au/business/the-resource-super-profits-tax--what-is-it-20100511-usnu.html

They have used the company tax rate as 28% rather that the 30% which I used so their top rate is slightly lower.
I didn't use the lower rate because the present rate is 30% and going on the fact that the last time the government promised to remove "a whole raft of taxes" when they bought in the GST, and then took ten years to even partially fulfil that promise, I don't expect this would be any different, so best take it as 30%.

mineral1

4564 posts

mineral1

WA, 4564 posts

27 Jun 2010 4:38pm

elmo said...

This one has me a wee bit bamboozled

Ok so there was something on television (known for it's hard hitting news articles),

Search as I may, I can't seem to find any other news articles on this.

Can someone please point me in the right direction

From another Right wing "commies under the bed" media mogul newspaper

www.theaustralian.com.au/nocookies?a=A.flavipes

elmo

8894 posts

elmo

WA, 8894 posts

27 Jun 2010 7:23pm

Thanks Mike,
Rather read about it before leaping to concussions.

Still only one groups opinion (the ones that would be getting the benifit from the increased super funding).

I find it interesting to read that they would recommend it with or without the RSPT being implemented

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