The good Senator now has a Facebook page.
Tags: barnaby joyce, facebook
Back in December, your humble blogger published a comprehensive critique of the Green-Labor-Independents’ disaster-in-waiting dubbed the “Minerals Resource Rent Tax”.
Or “mining tax” for short.
Today, Professors’ Carey and Fargher of Deakin Uni and the ANU respectively, have combined their scintillating intellects to do the same.
This will all sound very familiar to regular readers.
From the Age (emphasis added):
Flaws in the mineral tax mean Australia may profit little from its resource wealth.
Could Australia end up with little to show for its mining boom – as an echo of what happened to Nauru once its considerable phosphate wealth was exhausted?
Close examination of the proposed minerals resource rent tax reveals serious flaws that could leave the federal government well short of the forecast revenue. It is conceivable that some large and highly profitable mining companies could reorganise their affairs to pay little or none of the tax.
The first and most obvious shortcoming of the MRRT, in terms of its revenue potential, is that it applies only to coal and iron ore. All other minerals are exempt. But it is the design of the tax as it applies to coal and iron ore miners that could leave the government facing an unanticipated multibillion-dollar shortfall.
The main problem is that the tax is based not on an objective measure such as tonnes of material mined, but on ”super profit” (mining profit less allowances). Profit at the best of times is a highly flexible concept that can allow accountants to apply creative techniques to minimise a company’s tax obligations. With the MRRT, the incentives and opportunities for creative avoidance appear even greater than those applying to company tax.
…
The minerals tax is not based on audited company profits from statutory accounts, but on a narrow portion of profits from particular mining activities. It requires the taxpayers (that is, the mining companies) to determine the amount of proceeds and costs that relate to these activities.
Ruh roh!
Does that sound familiar?
According to Carey and Fargher, the companies who are supposed to be “taxed” are the ones who will do the measuring (accounting) that determines how much tax they will pay!
That’s exactly like the Clean Energy Future “carbon tax” (see “An OSCAR For The Clean Energy Future”), where the entire scheme relies on “encouraging” the “biggest polluters” to “self-assess” their emissions … and the “audit” procedure by the government is quietly but openly admitted to be nothing more than an exercise in managing the public’s “perceptions” of compliance by the “polluters”.
This reliance on the miners themselves to determine the appropriate proceeds and costs creates a significant incentive to estimate profit from taxable activities in the most tax-efficient manner. For example, the MRRT requires the miners to split revenue between the taxable value earned to the point of producing a stock of coal or iron ore and revenue earned after that point. Transfers within the company also need to be valued. Losses can be offset between operations.
This point yielded a key insight in my detailed critique of the mining tax (see “GilSwan Conned – Mining Tax The Greens’ Pit Of Despair”).
The design of the MRRT actually creates an incentive for the Big 3 multi-nationals to buy out their smaller competitors – including loss-making junior miners and explorers. Why?
Because they can claim numerous deductions against their MRRT liabilities from existing mines, by gobbling up smaller, locally-owned competitors.
In other words, far from “spreading the wealth” of the mining boom, the design of the mining tax will actually help the Big 3 to increase their monopoly, thus sending even more profits offshore.
At numerous points, opportunities exist to reduce revenue estimates and increase costs so as to minimise the taxable profit reported. Volatility in commodity prices could also allow strategic timing of the recognition of revenue and expenses. All these factors, combined with any decline in the underlying commodity price from the record levels seen when the tax was first envisaged, could greatly reduce the expected proceeds to government coffers.
So, too, could the generous and sometimes unconventional allowances built into the tax. There are more than 50 pages of allowances that can be used to reduce a firm’s tax liability. While most allowances have their foundation in generally accepted accounting principles (e.g. royalties paid to state governments or pre-mining exploration expenditure), other are less conventional.
For example, under division 75, miners can choose between the ”book value” or ”market value” of an asset, which will be allocated against revenue over the productive life of a mine in order to calculate MRRT liability. Depreciating assets based on market valuation is not generally accepted accounting practice, yet it is allowed in the legislation. In simple terms, a mining asset that cost $100 million to bring to production might today be worth $350 million if sold on the open market. A miner could use this higher valuation to calculate depreciation, which would reduce the profit subject to the tax.
Business transactions can be complex, and legislation must therefore contain a range of provisions that require subjective interpretation. The mining tax legislation adds a further layer of complexity, which at times defies conventional accounting and can be used to aggressively minimise the amount of tax payable.
…
Even at this late stage in the process, key improvements might be made if there were full transparency in the revised revenue estimates, the underlying assumptions and, in particular, the ability of the tax office to monitor and collect the minerals tax. It is not surprising that critics have begun to question Treasury’s revenue estimates, which are based on private information supplied by the mining companies that is not on the public record.
Mining companies are entitled to make a profit, but if the nation decides it is also entitled to a return on the exploitation of national resources, then it is important to design a tax that is effective. Once the resources are gone, they are gone for good…
Well done Professors.
Better late than never.
I wonder what a “professor of accounting at Deakin University’s faculty of business and law” pulls?
Indeed, what does a “professor of accounting at the Australian National University’s College of Business and Economics” pull?
One thing’s for sure. The Big 3 multi-national mining companies pulled the wool over Swan’s eyes in their backroom, closed door deal.
Unsurprising really.
Since Wayne Swan’s intellectual power wouldn’t pull the skin off a custard.
(h/t @CaroChristie )
Tags: gilswan, mining tax, MRRT, RSPT, wayne swan
Professor Sinclair Davidson at Catallaxy Files spots a tiny inconsistency:
The newspapers are full of the problems facing the aluminium industry. The basic problem as I see it is that the government has adopted a policy – the carbon tax – that should see the industry closing down (or at least massively reduced in size) but doesn’t want to admit to it. The AFR reports Bill Shorten explaining why the Treasury modelling doesn’t really show the industry collapsing (emphasis added).
Employment Minister Bill Shorten also rebuffed concerns based on the carbon tax modelling.
“It’s how you use that modelling – and that modelling depends upon the rest of the world doing nothing,” Mr Shorten said. “And the reality is the rest of the world is moving to lower emissions, greater carbon efficiency.”
An equilibrium global permit price emerges to clear the global permit market.
…
The modelling assumes an eventual shift to a lower cost coordinated international policy framework, recognising that this is ultimately in all countries’ best interests. By 2016, a more coordinated international policy regime allows countries to trade either bilaterally or through a common central market. As a result, a harmonised world carbon price emerges in 2016.
That must be the exact opposite to what Shorten is saying.
Indeed. But then again, as regular readers of this blog know, Treasury modelling is a farce anyway. So maybe that is why it does not bother Bill Shorten to blatantly lie about the critical base assumptions used by Treasury in their CO2 derivatives scam modelling … since the predicted outcomes (just like global warmists’ “models”) won’t be anywhere near reality anyway.
This propensity to lie seems to be endemic amongst Labor’s leading politicians.
Perhaps I should have titled today’s earlier post, “Labor’s Deficit Of Moral Hygiene”.
Tags: bill shorten, carbon tax, treasury modelling
From the Reserve Bank of Australia (RBA) website:
That’s $53.2 billion in Australian notes on issue.
Sounds like a lot, right?
According to the Australian Bureau of Statistics (ABS), in December 2011 there were 11.441 million employed people in Australia.
So $53.2 billion in notes equals just $4,655 per employed person.
Doesn’t sound like so much now, does it?
But wait. There’s more.
According to the RBA’s spreadsheet titled “Assets – Selected Assets and Liabilities of the Private Non-financial Sectors”, it seems that “Households and unincorporated enterprises” have $668 billion in “Financial Assets – Deposits.”
And “Private non-financial corporations” supposedly have another $318 billion in “Financial Assets – Bank Deposits.”
So that’s $986 billion in “Deposits” for households and private (non-bank) businesses … combined.
Versus a grand total of only $53.2 billion in actual Australian notes issued by the RBA.
Confused?
If so, then it is probably because you have not yet seen through the biggest, longest-running con in the history of the human race.
It used to be called “money-lending”.
Now it’s called “banking”.
In a nutshell, the “money” that most people think is in the bank … isn’t.
That’s why, during the peak of the GFC in October 2008, the RBA was printing up billions in extra cash, trying to keep up with a silent bank run:
The private banks keep reserves of cash distributed in 60 storerooms across the country with an average of about $35 million in each. They get topped up by the Reserve Bank before Christmas, when demand for cash typically rises by about 6 per cent, and at Easter, when there is a smaller increase.
[TBI note: That's only $2.1 billion in stored 'reserve' cash at Aussie banks at any time ... or a mere $183.50 for every employed person in the country!]
But in early October, the Reserve Bank started getting calls from the cash centres for more, especially in denominations of $50 and $100.
The Reserve Bank has its own cash stash. It is coy about exactly how much it holds, but it is understood to be in the region of $4 billion to $5bn.
As the Armaguard vans worked overtime ferrying bundles of $10,000 out to the cash centres, the Reserve Bank’s strategic reserve holdings of $50 and $100 notes started to run low and the call went out to the printer for more. The Reserve Bank ordered another $4.6bn in $100s and another $6bn in $50s…
Households pulled about $5.5bn out of their banks in the 10 weeks between US financial house Lehman Brothers going broke – the onset of the global financial crisis – and the beginning of December. That is roughly 80 tonnes of cash salted away in people’s homes. Mattress Bank is doing well, was the view at the Reserve. A year later, only $1.5bn had been put back.
(see Our Banking System Operates With Zero Reserves)
You see, dear reader, the global banking system is a colossal con-fidence trick.
Banksters have a government-issued exclusive licence to operate the most insidious “business” in the history of the human race.
They make a killing by lending us vast quantities of … digits. At interest.
Electronic code, in their computers.
Not actual cash money.
When you sign a form to borrow from a bank, the bank is ‘licenced’ to legally create new “money” to lend you. Right out of thin air.
The “money” loaned to you, does not exist.
It is just a new number, on their books.
Your new “loan”, is their new “Asset”.
What you have signed your working life away for, is nothing more than a new electronic bookkeeping entry.
You are working and slaving away, to pay back borrowed binary code … plus “interest”.
Tragically, most folks worldwide have fallen for this centuries-old con game.
Indeed, we have all been born into it. So, we consider it “normal”. We have known nothing different:
Most folks think that when they borrow from a bank, they are borrowing real money that someone else deposited.
Most folks think that banks pay interest to attract depositors, and then, lend that money out at a higher interest rate to people wanting a loan.
It just ain’t so.
As you can see from the RBA’s own statistics, even the “money” that we think we have deposited in the bank … just isn’t there.
There’s only $53 billion in actual cash notes issued by the RBA.
In total. For the whole country.
Versus $986 billion in “Deposits” that businesses and private citizens – you and I – think we have in the banks.
That’s about one (1) actual dollar in “face value”, for every eighteen dollars fifty (18.50) that we falsely imagine is deposited in the bank under our name.
If the “money” lent to you by banksters was only the money they had on deposit from other customers, then how would you explain the fact that (according to the RBA’s “Bank Lending by Sector”) Australian households owed $1.18 Trillion to the banks at December 2011 (including $721 billion for Owner-Occupier housing) … and Australian businesses owed a further $773 billion?
$53 billion in legal tender cash notes issued by the RBA.
$1.95 Trillion in bank loans to households and businesses … at interest.
That’s $36.80 in bank loans … at interest … for every $1 in actual cash printed by the RBA*.
It’s all bull$h!t folks.
By our lazy, ignorant complicity, in agreeing to allow our governments to grant banksters the exclusive power to create “money” and lend … electronic digits … at interest, we have all agreed to a system of human slavery.
Our own slavery.
We have enslaved ourselves, by agreeing to go along with this “system”.
It’s long past time that we all woke up.
And stopped playing along with the con game of “money”-lending.
And especially, of money-lending at “interest”.
There is a very good reason why so many great wise men – Plato, Aristotle, Cato, Cicero, Seneca, Moses, Philo, Buddha, and many many more – all denounced the evil of money-lending at interest. Indeed, it is the same reason why the only Biblically-recorded instance of Jesus Christ resorting to violence, was when he chased the money-lenders out of the Temple with a whip.
The wisdom of the ancients is even more relevant today.
In our modern technology-driven world – where “money” is now not even real gold and silver laboriously dug out of the ground, but mere electronic digits created at the tap of a keyboard and click of a mouse button – there is simply no intellectual or moral justification for the vast majority of mankind to continue allowing a tiny minority to profit from the life and labour of everyone else, by lending “money” at “interest” under government licence.
It is time to demand that our governments enact a single, simple, real reform that would change the whole world for the better.
For everyone.
(Except banksters)
It is time to ban usury … in the original meaning of the word.
And if our elected representatives refuse to act against the banksters’ interest, in our best interest?
Then the following essay outlines my suggestion for one way to beat the bastards at their own game -
* Some may correctly point out that Australian banks do not only take “deposits” from Australians; they also borrow “money” from abroad, in order to lend in Australia. Indeed, this gives rise to the ever-controversial topic of the banks claiming that increases in the cost (ie, interest rate) they are paying for “wholesale” money they have borrowed from abroad supposedly justifies their refusal to pass on the full value of “official” interest rate cuts by the RBA. Nevertheless, the central point of this article remains unchallenged. According to the RBA at December 2011, AFI’s (All Financial Intermediaries) held $308.6 billion in “Offshore Borrowings” – a very far cry from the $1.95 Trillion in loans-at-interest to Aussie households and businesses. More important to note is that these “Offshore Borrowings” too, are mere electronic digits … not actual cash.
Tags: 99%, bank run, banksters, endogenous money, fractional reserve banking, notes on issue, occupy wall street, ows, RBA, usury
Comments