The paper, with updated data, was provided by Sinclair Davidson, who is professor of Institutional Economics in RMIT’s School of Economics, Finance and Marketing.
“The mining industry has a higher average effective tax rate than the Australian average,” Davidson said.
“Indeed, it has always been above the average plus one standard deviation of all industries. The argument that mining tax rates are lower than that of most (or even many) other industries is simply not true.”
Davidson’s analysis shows that while the mining industry paid $13.6 billion in net company tax in 2012-13 – down from some $15.14 billion the year before – that excludes other contributions that the sector made to the public purse like royalty payments.
Since 2000-01, net company tax receipts from the mining industry have increased 7.8 times while overall net company tax receipts have only increased 2.4 times, while the mining industry’s share of net company tax has risen from 6.7% in 2000-01 to 21.1% in 2012-13.
The report comes amid an Australian Senate inquiry into corporate tax avoidance, in which BHP Billiton confirmed last month that it pays just 0.002% on the sales that it directs through its marketing hub in Singapore.
Woodside, meanwhile, has denied any suggestion that its own sales office in the island nation was set up for tax reasons.
The mining sector has been singled out for specific criticism in addition to some US high technology firms, with former Treasurer Wayne Swan being especially vocal on Twitter claiming that miners have persistently misled the Australian people about the tax they pay, citing a figure of 15% as the industry’s effective tax rate.
“These sorts of claims rely on the fact that taxation is not well-understood and knowledge of the facts of taxation is generally quite poor in the community,” Davidson said.
“For example, it is not well-known that the mining industry, comprising just 5710 companies out of some 854,745 companies liable for the company tax [less than 1%], paid over 21% of net company income tax. That comes to $13.6 billion.
“To provide some context, that is much more than the $9 billion that personal income tax raised in South Australia, or the $2.3 billion in net personal income tax paid by Tasmanians.”
Davidson said that in 2012-13, mining earned 19.2% of taxable income but paid a 21.1% share of the net company tax.
“By contrast, the manufacturing sector earned 7.3% of taxable income and paid 6.45% of net company tax. Similarly, the financial sector earned 35.7% of taxable income and paid 31.4% of net company tax.”
The Budget revealed that the federal government would issue harsh new fines that could amount to 100% of taxes unpaid, targeting companies that divert profits offshore to reduce taxes paid in Australia – though Hockey reassured miners that Australia wasn’t the only country looking at such measures.
“These contrived arrangements have been used to avoid paying tax in Australia and they are very complicated transactions,” Hockey said.
“Obviously, they have not been paying their fair share of tax in Australia. Have no doubt the rest of the world is looking at this legislation.”