The front page of today’s Sydney Morning Herald: We have Phillip Corey describing the changes to the Rent Tax.
Dwarfing this, and by far the largest story on the front page : How a $7m advertising campaign saved a fortune .
Thank god that when it comes to a major issue we have Phillip Lee, Marketing Editor, leading the coverage with a focus on the questions that really matter. Whose advertising campaign was more successful?
All this fantastic coverage comes under the heading “Smart tactics from the resource giants strike gold as labor compromises on tax”, which not only provides entertaining syntax, but makes sure the events are framed by the important issue of PR.
Oh…there’s some boring stuff about the implications of the policy or something – *yawn* – but it’s buried in the innards of the paper thankfully.
Funny, I thought Phillip Lee’s piece was the most instructive and illuminating news item about the backdown in all the media today. Required reading for people wondering how our “democracy” works.
IS THE REAL RATE 22.5% ?
My colleague Karl Fitzgerald has drawn my attention to the following paragraphs from the Government’s statement:
“Iron ore and coal will be subject to a new profits-based Minerals Resource Rent Tax (MRRT) at a rate of 30 per cent.
MRRT assessable profits are calculated on the value of the commodity, determined at its first saleable form (at mine gate), less all costs to that point.
Projects will be entitled to a 25 per cent extraction allowance that reduces taxable profits subject to the MRRT. This allowance recognises the contribution of the miner’s expertise to profits at the mine gate.”
It’s not clear to me whether this allowance is applied to the base of the MRRT. If it is, the effective tax rate is 22.5%, not 30%.
For the record, it was Karl who nominated the 22.5% rate. I was hesitant because I wasn’t sure whether the “extraction allowance” was a discount on the tax base or an uplift on a deduction therefrom. It’s the former; Karl was right.