A column in the Sydney Morning Herald (18/8) by Michael West concerning the minerals sector’s tax contribution is so riddled with errors that it demands a response.
The article’s central proposition is the mining sector pays insufficient tax.
In reaching this conclusion, the report studiously ignored a wealth of official data and independent research on the mining industry’s tax and economic contribution to Australia by independent and respected bodies including the Australian Taxation Office, the Reserve Bank of Australia and Deloitte Access Economics. The only source used was the Australia Institute, the research unit of the Greens Party.
No amount of selective referencing can make the facts go away. The mining industry makes a substantial contribution to Commonwealth and State and Territory revenues through royalty payments, company tax, stamp duties, payroll tax and a range of other taxes.
ATO Tax Statistics show that the mining industry paid more than $15 billion in company tax in 2011-12 which was about 25 per cent of company tax in Australia.
Combined with royalties, mining contributes more to government than any other industry in Australia. Mining is estimated by respected DAE to have paid $24.5 billion in 2011-12 alone which is double its payment in 2006-07. Company tax and royalty payments result in an effective tax rate well in excess of 40 per cent over the five years to 2011-12.
The report attempts to play down the industry’s contribution to Australians by discounting the contribution of royalties. Royalties form a significant part of the compulsory payments made to government, over $9 billion in 2011-12, along with company tax and other payments. Royalties are paid to government, collected by revenue authorities and go to general revenue to fund roads, hospitals, schools and other public services for the community.
It is also simply false to suggest mining pushes down its tax bill due to special deductions. The Productivity Commission’s latest report on industry assistance concluded that “the estimated effective rate of assistance from tariff and budgetary assistance for mining has been negligible.”
Fundamental and cringe-worthy errors are not new for this correspondent. Only 3 weeks ago, Fairfax Media was forced to issue a Correction on an ‘Exclusive’ by the same journalist concerning a mining company’s tax contribution, admitting the report was ‘incorrect’.
In the Correction, Fairfax Media also conceded that the correspondent, portrayed by the masthead as a ‘Business Columnist’ did not know the difference between ‘revenue’ and ‘taxable profits’.