Antinuclear

Australian news, and some related international items

Mining lobby tricks government with its big taxpayer fairytale, swaps Deloitte for EY

 https://michaelwest.com.au/mining-lobby-tricks-government-with-its-big-taxpayer-fairytale-swaps-deloitte-for-ey/by Callum Foote | Nov 29, 2022 |

The Minerals Council of Australia has duped Energy Minister Madeleine King into repeating its highly inflated claims of how much taxes its mostly foreign multinationals members pay. Callum Foote reports on an $85 billion PR scam.

The Minister for Energy, Madeline King, has repeated claims from mining lobby group, Minerals Council of Australia, that the mining industry made payments of $43.2 billion in company tax and royalties to Australian governments in in a speech given at the ​​NT Resources Week conference. The figures were repeated on ABC Radio without question.

As revealed here last year, Big Four consulting firm Deloitte used to do the misleading report for the mining lobby. This year it is another Big Four firm, Ernst & Young. The EY report, has – like Deloitte’s previous work – failed to disclose that up to 60% of the tax that they claim the mining industry pays is returned in the form of GST refunds.

They have included GST paid but not refunded, which is massively misleading. The false claims come at a critical time for the mining and energy sectors which are reaping record profits, partially at the expense of energy customers, and the minerals lobby is threatening a public campaign against the government if efforts are made to increase taxes and royalties.

The big GST swindle

The tax numbers produced by EY are derived from the ATO’s Corporate Tax Transparency data and, while their methodology differs somewhat from that of Deloitte’s last year, the report still fails to disclose the GST refund the minerals industry enjoys.

The report avoids mentioning that the mining industry, as an exporting industry, legitimately receives a huge GST refund every year.

A different set of ATO data, the Taxation statistics 2019-20 reveals that over $7.5 billion was refunded to the mining industry as a whole in 2019-20 which is the latest year that data is available.

Over the last decade years, almost $85 billion have been returned to the mining industry through GST refunds, which equals 55.7% of the $152 billion in company tax paid by the industry as a whole.

In the accounting profession, company taxes are regarded as deriving from company revenue. That is, income from a business comes in, costs such as wages are paid which leaves gross profit upon which company tax is paid. Taxes like GST and PAYG are *collected* for the government, not *paid* by the company.

According to forensic accountant Jeff Knapp “GST doesn’t come through the revenue of the company into profit, which would be ‘company tax’. It is collected from customers, just as PAYG is collected from employees”. These taxes are not paid by a company, they are collected, for government, on behalf of a company.

The claims made by MCA CEO Tania Constable regarding the amount of tax paid by her industry have been used to defend against calls for higher mining taxes: “A new tax on Australian mining companies would seriously undermine our international competitiveness, resulting in jobs losses across the country and devastating many communities which rely on mining,” she said.

The Minerals Council refused to defend its claims when approached, numerous times, for comment about its members receiving GST refunds and the misleading nature of the report.

EY has been contacted for a comment, along with the MCA and Minister for Energy.

Running the line

Compared to last year’s report, this year’s has received far less attention. In 2021, Australia’s major media organisations, News Corp and Nine Entertainment were duped by the mining lobby’s false claims about its contribution to Australia.

This year, it’s mainly the industry outlets such as Mirage News, Australian Mining and Mining Magazine that have repeated the claims.

It should be noted that Deloitte’s report considers only the minerals industry, excluding oil and gas from its analysis. This is important because gas corporations are presently the most profitable of all minerals thanks to the Russian invasion of Ukraine and soaring energy prices. This sector is notorious for tax avoidance and dollar-for-dollar avoids more tax than any other sector. The PRRT, a tax which was designed to capture more of this wealth, is regarded as a failed tax. 

GST data for the minerals industry is only available for four years between 2015 and 2018. During this period, GST refunds to the minerals industry averaged year-on-year 60% of the company tax total, compared to the mining industry’s overall 61%. In 2018 the figure was higher, with minerals at 36% to mining’s 32%.

So why have royalties and company tax been singled out?

It appears the report was intended from its inception to provide an exaggerated view of the contribution of the minerals industry to Australian governments to ward off attempts to increase taxes.

First commissioned in 2014 under MCA’s then-CEO Brendan Pearson – who has been more recently employed in the Prime Minister’s office – Deloitte’s report was used as proof in an argument that supported the MRRT being repealed.

Pearson said the report “underlines that we are paying an effective tax rate above 40 per cent, when you combine the tax rate and the royalties”.

Royalties and taxes are two entirely separate concepts and to conflate the two is misleading. However, it is a well-worn strategy used by the mining industry to make it appear as though they are paying a higher tax rate than they really are.

Brendan Pearson was forced out as CEO of the Mineral Council in 2017, when BHP took issue with his pro-coal, anti-Paris Agreement lobbying. BHP threatened to review its membership with the MCA, with Rio Tinto signalling it would do likewise if Pearson did not step down.

Pearson, landed on his feet taking up a senior advisory role regarding international trade and investment in former Prime Minister Scott Morrison’s office in 2019.

BHP and Rio Tinto, who are the MCA’s largest members, declined to be interviewed for this story.

Advertisement

November 29, 2022 - Posted by | AUSTRALIA - NATIONAL, business, politics

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: