Miners Tax Lawyers rejoice as legal deal is done with Julia

Posted on July 1, 2010 by Admin

The meeting today between Julia Gillard and BHP, Rio Tinto and Xstrata appears to have resulted in a peaceful resolution to the mining tax war which was developing between the Government and the Australia’s largest mining companies. The points of compromise appear to have been where the kick in rate for the tax comes in which was previously set at 5% and it has now been agreed that it will be at 12% as well. It also appears that a the government has given ground on the two biggest objections of the Mining industry. The first of these was that the tax would be retrospective. The mining companies can now avoid the costly taxation over the Pilbara mines in Western Australia and the rich coal reserves along the east coast of Australia as these are existing assets and the government appeared to accept that it would not make the tax retrospective in its application. This is a very large concession. It is also one which could potentially have flared a constitutional argument against the tax because retrospective legislation is only of questionable constitutionality. The other major concession which the government seems to have given is that it now accepts that 40% was too high as a tax on the Miners and some slightly lower figure will now be accepted. The proposed tax was the highest in the world by a long shot, with only Norway’s Oil Super-Profit Tax coming close in terms of its rate of profit capture.

Naturally, the imposition any greater amount of taxation is an imposition on industry which will make it less competitive internationally and prevent the Australian Mining industry from growing and creating more jobs (which would in turn yield greater tax revenue). However, this argument is not accepted by the government. Under Mr Rudd’s watch, an enormous government debt accumulated and this must now be repaid in some method, the mining tax appears to be the popular tax that the government can think of to fill this giant hole in its budget.

Mining Law and the Resource Super Profits Tax

Posted on June 19, 2010March 28, 2024 by Admin

According to the current proposal by the government for the new mining tax, the so called Resource Super Profits Tax (RSPT) is due to be introduced on 1 July 2010 at a rate of 40% on the profits made from the exploitation of Australia’s non-renewable resources.

Why is the government doing this?

The present government has stated that the exploitation of Australia’s wealth of natural resources does not currently provide a fair return to the Australian community. Although there is no empirical evidence given to verify this, the government believes that the imposition of the new tax will increase employment and investment in the resources sector. There is no explanation as to how this is likely to occur, in traditional economics the imposition of a new tax is likely to reduce employment and investment in a sector where greater taxation is applied. However, the economic argument for the tax is that compared to the current system of taxation which is based on royalties rather than a proportion of profit the new RSPT will only impose taxation where the businesses are profitable. It could be argued that this is misguided because it removes the possible initial incentive for mining prospecting or the mining entrepreneur to invest because in an already risk laden business, losing 40% of the profit to taxation in addition to company income tax would be a serious disincentive to invest or to employ new staff, including through EU Workers. The government also argues that it will reduced national uncertainty be creating a nationwide uniform system of taxation for mining which may be true, but it will also be a new tax system that will be difficult to administer the compliance costs of many businesses will go up as they attempt to identify their exact obligations under the new system of taxation. It is also argued that this profit based resource taxation is used in countries such as Norway (50% on oil), Canada and the United States. However, with the exception of Norway’s tax on oil super profits, these other taxation systems do not exceed 20%. There is therefore very little evidence that the tax will work int he way that the government predicts. It will most likely do enormous damage to Australia’s national economy and prevent our largest export industry from performing competitively in an already globally competitive market.

Are the any exemptions of ways of reducing the tax?

One respite which mining companies may find in relation to this new tax is that the crude oil excise is going to be abolished a the same time as the imposition of this new tax. Resource companies will also be able to elect to stay with the current Petroleum Resource Rent Tax (PRRT) of move over onto the new tax system, although once this decision has been made it will not be capable of being reversed. It will also be possible to obtain credit for royalties paid to state governments in relation to the tax. Perhaps the most important element of the new tax proposal is that the basis of exemptions as they are proposed is that if there is no net benefit to society of applying the as in the case of minerals which are not super profitable or in the case of microbusinesses which face large compliance costs then it would be unlikely that the tax would be applied according to the current proposal.

Legal implications of the Oil Spill

Posted on June 13, 2010November 10, 2023 by Admin

The scale of the oil spill being experienced in the USA has no direct comparison in history, it is now the largest uncontrolled discharge of oil from a man made facility on record and BP is still not only struggling with the spill itself but also starting to get coated in a thick black slick of negative PR and potentially a toxic set of legal claims by people affected by the spill. As the Deepwater Horizon oil spill continues into its second month, BP has already committed to paying for the recovery efforts and all “legitimate claims,” but lawmakers are considering raising legal liability limits from $75 million to $10 billion.

The parties who could possibly claim as a result of the spill is any tourism operator whose business was affected by the spill or any coastal fisherman, coastal farming industry operator anyone else whose livelihood was dependent on the environment that existed prior to the spill and has now been destroyed as a result of the accident. This is not to mention that claims that could arise from the various local, state and federal authorities who could potentially prosecute the company for criminal negligence or fine them for breaches of environmental health and safety regulations. This case is similar to the one at camp lejeune, for which those affected will be looking for a camp lejeune water contamination attorney and personal injury attorney who can assist them in resolving this matter via legal means. Employees who got injured in similar accidents may hire a workers compensation lawyer to help them file a claim.

Perhaps the closest analogy in recent history to the scale of the spill that has occurred is the Exxon Valdez disaster which occurred in Prince William Sound, Alaska, on March 24, 1989 when the tanker hit Prince William Sound’s Bligh Reef and spilled an estimated minimum 10.8 million US gallons (40.9 million litres, or 250,000 barrels) of crude oil. In the case of Baker v. Exxon, an Anchorage jury awarded $287 million for actual damages and $5 billion for punitive damages. The punitive damages amount was equal to a single year’s profit by Exxon at that time and Exxon was one the ten largest companies in the world by revenue at the time. In this particular case, the tanker was allegedly drunk. However, the actual causes of the disaster were later identified as being a faulty radar system and the negligence of the company in placing excessive requirements on the third mate of the vessel. The present spill has similarities because experts associated with the maintenance of the well expressed concerns about ‘well control’ in the months before the accident. The direct cause of the accident was that at approximately 9:45 p.m. CDT on April 20, 2010, methane gas from the well under high pressure shot up and out of the drill column marine riser, expanded onto the platform, and then ignited and exploded, destroying the well and allowing crude oil to gush out into the surrounding ocean uncontrollably. Early attempts to cap the well also failed. This element of company negligence is in common and for this reason it is expected that BP will face an even larger bill for the spill than Exxon did in its disaster.