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Analysis: the great tax shortfall

Comrade Colin has a pleasing sound to it, but it is unlikely that the Western Australian Premier, Colin Barnett, really has developed communist tendencies despite his curious threat to stage a rare strike by an Australian State Government.

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One only needs to review the history of the so-called "Windfall Profits Tax", levied on US oil companies by the Carter administration in the late 1970's, to see how well profits-based surtaxes work out: both expansion and sustaining capex investments in US oil infrastructure withered to the point that by 1979, petrol rationing and long lines at the pump were the norm. To add insult to injury, actual tax revenues fell far short of projections, so the tax did little to stem the stagflation that hammered the US at that time. It bears reminding that every single state in Australia has mineral wealth, but only WA and Queensland actively encourage development of that wealth across their states. The so-called "two speed economy" across Australia is artificially created by state governments that restrict or (in the case of Victoria and Tasmania) actively work to prohibit mineral resource development. Oddly enough, one will also find that Federal spending per capita is higher in states where resources development is restricted. While it may be the right of individual State governments to choose to restrict resources development, it is certainly not fair to states that actively promote it that they should have the boon of their resource development taken from them by states (and political parties) who are essentially along for the ride. Where the argument supporting the MRRT (and its equally horrific predecessor, the Super Profits Tax) falls along the lines of, "all of Australia should benefit in resources profits because the minerals belong to all Australians", my response is, "fine, then YOU go pick up a shovel and start digging". Funny how the same people who say this also complain, without experiencing any cognitive dissonance whatsoever, about how jobs in the resources sector pay far more than any other market segment. Hmmm...

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