Countering Some Poor Arguments for a Mining Tax
I was recently asked to comment on an article in The Age by Michael Gilding, entitled “More tax dollars and less mining? That’s a win-win situation”. Here is my response:
Short version: Gilding identifies several problems for which a reduction in mining – though it might help – is the wrong solution.
Longer, point by point version:
Gilding’s first argument, that “mining sucks oxygen (capital investment) from the rest of the economy”, is one I can’t support. The reason is that a basic tenet of economics is that people (the market) make their own best decisions – in this case, investing in mining rather than, say, toll roads. The first rule of taxation is therefore that it distorts private decision-making as little as possible, which makes justifying a mining tax on the grounds that it distorts decisions problematic. (The RSPT, I note, was lauded precisely for NOT distorting investment decisions.)