Government and Business

B.2

The resource super profits tax establishes a tax rate of 40 per cent tax that is levied on ‘super’ profits that will be resulted from using non-renewable resources of Australia’. It is though that crude oil expunge will be replaced by it. A credit, which will be essentially refundable, for royalties mining units recompense to the regions will also be included by it. The government designed this scheme because of some advantages that this scheme was going to provide:

• Investment in mining will be increased by 4.5 %. This will reduce monopoly behavior of large corporations in the mining industry and small business will be able to grow their business in the industry.  
• The rate of employment in the mining industry will rise by 7 %. This is because of the addition investment that will be made by the investors. This addition investment will help the industry to grow. So more human resources will be needed to maintain the additional tasks because of this growth.  
• The production rate in mining industry will also rise by 5.5 %. Thus the price of the final products will be decreased because companies will be able to produce in large scale with the increased amount of investment. Eventually general public will enjoy these products at a reduced price.

RSPT scheme was designed to produce revenue from the tax projected at $3 billion in its 1st year of execution, which would expect to rise to $9 billion in 2013–14. Moreover, general public will be able to enjoy reduced price of the final products produced by those mining companies, employment rate will increase and production rate will also be increased.  As RSPT was designed for protection public interest so it can be said that Public theory of regulation best explains the position of the Government when proposing the Resource Super Profits Tax (RSPT).         

b.3)

The Minerals Resource Rent Tax was designed as a replacement of a controversial tax scheme named “Resource Super Profit Tax”. The Minerals Resource Rent Tax was proposed as a tax scheme levied on the profits that are resulted from the mining of Australia’s non-renewable resources in. This scheme was announced on 1 July, 2012

This scheme proposed a tax rate of 30% on the companies whose annual profits reach $75 million. This tax scheme was designed to protect small local businesses in the industry. Public interest is ignored in this theory.  

There was an alliance group which was led by Tony Abbott promised to repeal Minerals Resource Rent Tax if they won the election as it was harmful for the industry’s competitiveness and growth. It won the 2013 election. On 2 September 2014, The Mining Tax Repeal Bill was eventually in the Parliament houses.

It was estimated that about $22.5 billion revenue will be collected from the execution of this tax scheme in the first four years. The main objective was to spend the whole money for the purpose of providing pensions and granting tax cuts to small enterprises.