Me on Bloomberg
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Jack Houpe
GT40s Supporter
Very well put Jim, good job.
I see we have the same hair stylist.
I see we have the same hair stylist.
Jim,
I think you are mostly in line with my thinking on the issues discussed. On the proposed tax on mining profits here, while I understand your main point that it hasn't yet become law, and may not, the rationale (apart from the gov't. always needing more money) is that the product the companies are digging up and selling was not created by them. It is in the ground and belongs to all of us. Sure, they are investing big capital and taking the risk, but when they make money selling off something we own, then we should get a fair share of the proceeds.
I think you are mostly in line with my thinking on the issues discussed. On the proposed tax on mining profits here, while I understand your main point that it hasn't yet become law, and may not, the rationale (apart from the gov't. always needing more money) is that the product the companies are digging up and selling was not created by them. It is in the ground and belongs to all of us. Sure, they are investing big capital and taking the risk, but when they make money selling off something we own, then we should get a fair share of the proceeds.
Pat Buckley
GT40s Supporter
Nice going......you make sense.
Duplicate post.
I agree but they already pay a huge tax and an additional 40% tax will stop investment and cost at least 50K jobs in the mining sector very quickly.
Best
From the information available, it seems that our local mining companies pay very little tax (proportionally) and make extremely high profits. Similar criticism could be levelled at our major banks. However, they are not taking a resource owned by us and flogging it for their own profit.
Obviously, reducing the profitability of any enterprise will reduce investment and employment opportunities, but it may be an option of more value to Australia to protect local manufacturing and value-adding (to the raw product) for that purpose.
My 2c worth.
Obviously, reducing the profitability of any enterprise will reduce investment and employment opportunities, but it may be an option of more value to Australia to protect local manufacturing and value-adding (to the raw product) for that purpose.
My 2c worth.
Being out of the UK, I was unable to get the Bloomberg video. But as I understand, I agree a further tax will impede jobs, but I expect that we will see all currencies devalued against raw materials and the cost of life for all will go up. To counteract this, the governments need to spend less money, and tax less.
The Bottom line is that Mining Co.'s already pay a significant tax and if this proposal goes through 100,000 or more jobs will be lost and the AUS$ will lose a lot of value.
Those that vote for Rudd will get what they deserve and capital will go elsewhere.
The Proof is in the AUS market and $ crash since the tax was announced.
Pete McCluskey.
Lifetime Supporter
I totally agree Jim.
Dalton I think you have been listening to Rudd's propoganda and spin doctors.
The Australian tax office's own data shows a total tax of 41.3% including royalties on miners.
The ATO data said miners paid an effective rate of 27.8 per cent, which rose to 41.3 per cent with the inclusion of state royalties.
Dalton I think you have been listening to Rudd's propoganda and spin doctors.
The Australian tax office's own data shows a total tax of 41.3% including royalties on miners.
The ATO data said miners paid an effective rate of 27.8 per cent, which rose to 41.3 per cent with the inclusion of state royalties.
Peter Delaney
GT40s Supporter
A recent email from a Macquarie Bank advisor to his clients (all names removed) :
-------------------------------------------------------------
Subject: Impacts of Labors response to Henry Tax Review - my own views and response
To:
Dear Clients,
A few Macquarie analysts attended a breakfast meeting with Wayne Swan yesterday. One of the analysts asked why the 40% "Super Profits Tax" kicks in at the long term bond rate which is currently 5.75% (that means that a company will pay this new tax on top of the company tax rate if they earn a return on investment above 5.75%). She asked why the tax did not kick in at a higher rate that was closer to a companies weighted cost of capital (normally about 10%). Anyone who has studied finance knows that a company will not invest in a new project unless that project will generate a return on investment above the companies cost of capital. The cost of capital is the cost of the companies funds and comprises both debt and equity (see definition Cost of capital - Wikipedia, the free encyclopedia).
Apparently Wayne Swan did not understand the question.
Apparently Wayne Swan thought that the long term bond rate was a companies cost of capital.
The Macquarie analyst then asked if Swan would rule out a super tax on banks. Wayne Swan would not answer the question directly and skirted the issue.
Our analysts also workout that this "Super Profits Tax" applies to anything dug out of the ground. That includes clay, sand, fertiliser, silica etc. It hits the fertiliser, building and construction industries.
The "Super Profits Tax" is not just a tax on resources but a broad based tax which will also hurt the construction/building and housing industry and all industries where any kind of Australia natural resource is an input to the cost of production.
I am not normally a person to make political comments to my clients and what I am about to say are my own views and not the official Macquarie line. I have a duty to give you my honest opinion on anything that has the potential to significantly affect the markets and your investments. The governments response to the Henry Review has me deeply shocked. Our market is falling for a 3rd straight day in a row. The share market is a bell weather for the direction of the state of our economy and the market is saying to us right now that Kevin Rudd is pursuing an agenda that is going to destroy economic growth in Australia.
I have listed my analysis of the Labor governments response to the Henry Tax Review as follows:
- If the Macquarie analyst is right Wayne Swan is financially illiterate and has demonstrable incompetence.
- The "Super Profit Tax" title is misleading and dishonest. This is a tax on ordinary profits, not super profits. 28% Company tax is still payable along with the 40% "Super Profits" tax, i.e. both are payable at the same time on a return above the bond yield (5.75%).
- The chart Wayne Swan showed to demonstrate that taxes paid by the resource sector were falling while mining profits were increasing excluded company tax payments. This is a dishonest manipulation of tax data designed to deceive.
- The proposed increase in super contributions will be offset by a fall in the value of superannuation assets
- We can safely assume that Labor has privately considered introducing a super tax on banks, especially if taxes from resources dry up
- Raising taxes increases the likelihood of cost push inflation, i.e. new taxes may be passed onto consumers in the form of higher prices for products and services.
- Foreign investors in Australia are alarmed. Australia is now seen as being a high sovereign risk destination to invest. There is a significant risk of major capital flight out of Australia .
- Capital flight out of Australia would be disastrous for our economy. It will destroy investment, jobs and growth.
I saw no tax incentives in the Henry report to encourage innovation and investment in research and development into IT/medical research/renewable energy or any other industry that could be built up to sustain our nation once the resource boom is over. There is no incentive to make the non resource rich Australian States competitive. We will strip our natural resources to pay for our high standard of living while we fail to build the global competitiveness our nation needs when the mining boom is over.
I saw no attempt to divert any "super" taxes into a new Australian sovereign wealth fund that could be used to preserve the huge cyclical profits from the mining boom. A new Sovereign Wealth fund could then re-invest real super profits back into building other industries that have the potential to sustain economic growth post the mining boom. Instead all the super taxes will be spent to win votes.
The fall in the value of resource and resource related stocks in the last 3 days has wiped billions of dollars off the value of superannuation and is proof that foreign money is already withdrawing from Australia. An exodus of foreign capital is not something that happens overnight. It could take months to play out. The new "super profits" tax is supposed to generate $12b in 3 years. More than $12bn has been wiped of the market in 3 days.
China is trying to slow its economy down to prevent its economy from bursting as it overheats. Every week we are seeing the Chinese tighten money supply to slow themselves down. Now is not a time to destroy the resource sector while China is at risk of tapping the breaks too hard and slowing itself down too fast.
The big winner out of this will be the US markets. Stocks with strong $US earnings will benefit from a falling $A while money comes out of this country. Stocks like CSL, WDC, QBE, NWS, JHX will benefit and defensives like WOW and WES will be supported too.
If the current government of Australia persists in pursuing its agenda as laid out by its response to the Henry Review then I think the only thing that will save Australia from a serious economic slowdown in the next 2 years will be a change of government at the next general election later this year.
Before acting on anything in this email please call me first to discuss your portfolio and investment strategy.
Regards,
l Senior Investment Adviser l Macquarie Equities Limited
Macquarie Private Wealth
Level 7, 1 Shelley Street , Sydney NSW 2000 "
-------------------------------------------------------------
Subject: Impacts of Labors response to Henry Tax Review - my own views and response
To:
Dear Clients,
A few Macquarie analysts attended a breakfast meeting with Wayne Swan yesterday. One of the analysts asked why the 40% "Super Profits Tax" kicks in at the long term bond rate which is currently 5.75% (that means that a company will pay this new tax on top of the company tax rate if they earn a return on investment above 5.75%). She asked why the tax did not kick in at a higher rate that was closer to a companies weighted cost of capital (normally about 10%). Anyone who has studied finance knows that a company will not invest in a new project unless that project will generate a return on investment above the companies cost of capital. The cost of capital is the cost of the companies funds and comprises both debt and equity (see definition Cost of capital - Wikipedia, the free encyclopedia).
Apparently Wayne Swan did not understand the question.
Apparently Wayne Swan thought that the long term bond rate was a companies cost of capital.
The Macquarie analyst then asked if Swan would rule out a super tax on banks. Wayne Swan would not answer the question directly and skirted the issue.
Our analysts also workout that this "Super Profits Tax" applies to anything dug out of the ground. That includes clay, sand, fertiliser, silica etc. It hits the fertiliser, building and construction industries.
The "Super Profits Tax" is not just a tax on resources but a broad based tax which will also hurt the construction/building and housing industry and all industries where any kind of Australia natural resource is an input to the cost of production.
I am not normally a person to make political comments to my clients and what I am about to say are my own views and not the official Macquarie line. I have a duty to give you my honest opinion on anything that has the potential to significantly affect the markets and your investments. The governments response to the Henry Review has me deeply shocked. Our market is falling for a 3rd straight day in a row. The share market is a bell weather for the direction of the state of our economy and the market is saying to us right now that Kevin Rudd is pursuing an agenda that is going to destroy economic growth in Australia.
I have listed my analysis of the Labor governments response to the Henry Tax Review as follows:
- If the Macquarie analyst is right Wayne Swan is financially illiterate and has demonstrable incompetence.
- The "Super Profit Tax" title is misleading and dishonest. This is a tax on ordinary profits, not super profits. 28% Company tax is still payable along with the 40% "Super Profits" tax, i.e. both are payable at the same time on a return above the bond yield (5.75%).
- The chart Wayne Swan showed to demonstrate that taxes paid by the resource sector were falling while mining profits were increasing excluded company tax payments. This is a dishonest manipulation of tax data designed to deceive.
- The proposed increase in super contributions will be offset by a fall in the value of superannuation assets
- We can safely assume that Labor has privately considered introducing a super tax on banks, especially if taxes from resources dry up
- Raising taxes increases the likelihood of cost push inflation, i.e. new taxes may be passed onto consumers in the form of higher prices for products and services.
- Foreign investors in Australia are alarmed. Australia is now seen as being a high sovereign risk destination to invest. There is a significant risk of major capital flight out of Australia .
- Capital flight out of Australia would be disastrous for our economy. It will destroy investment, jobs and growth.
I saw no tax incentives in the Henry report to encourage innovation and investment in research and development into IT/medical research/renewable energy or any other industry that could be built up to sustain our nation once the resource boom is over. There is no incentive to make the non resource rich Australian States competitive. We will strip our natural resources to pay for our high standard of living while we fail to build the global competitiveness our nation needs when the mining boom is over.
I saw no attempt to divert any "super" taxes into a new Australian sovereign wealth fund that could be used to preserve the huge cyclical profits from the mining boom. A new Sovereign Wealth fund could then re-invest real super profits back into building other industries that have the potential to sustain economic growth post the mining boom. Instead all the super taxes will be spent to win votes.
The fall in the value of resource and resource related stocks in the last 3 days has wiped billions of dollars off the value of superannuation and is proof that foreign money is already withdrawing from Australia. An exodus of foreign capital is not something that happens overnight. It could take months to play out. The new "super profits" tax is supposed to generate $12b in 3 years. More than $12bn has been wiped of the market in 3 days.
China is trying to slow its economy down to prevent its economy from bursting as it overheats. Every week we are seeing the Chinese tighten money supply to slow themselves down. Now is not a time to destroy the resource sector while China is at risk of tapping the breaks too hard and slowing itself down too fast.
The big winner out of this will be the US markets. Stocks with strong $US earnings will benefit from a falling $A while money comes out of this country. Stocks like CSL, WDC, QBE, NWS, JHX will benefit and defensives like WOW and WES will be supported too.
If the current government of Australia persists in pursuing its agenda as laid out by its response to the Henry Review then I think the only thing that will save Australia from a serious economic slowdown in the next 2 years will be a change of government at the next general election later this year.
Before acting on anything in this email please call me first to discuss your portfolio and investment strategy.
Regards,
l Senior Investment Adviser l Macquarie Equities Limited
Macquarie Private Wealth
Level 7, 1 Shelley Street , Sydney NSW 2000 "
Pete McCluskey.
Lifetime Supporter
I couldn't agree more, Swan is as dumb as duck shit. Thanks for posting.
